Please answer question 1? Thanks!
PAKPAY Explain. Case 4-9 Eminent Domain: Whose Rights Should be Protected? The leading New York court case conecrning the enforcement of pastemployment protective prenants normal IX Sinan Misery. N.Y.2d 34 (1906). The case demonstrates why accounting firma should include carefully crafted protective convenants in their employment, partnership, and shareholder agreements. In Suwan, the defendant Hirscher was a sorontant whee kwal Buffalo firm had been acquired by RX). When Hirschberg was promoted to manager at HD, he signed an agreement that prohibited him from servicing Hos clients for 18 mootballer the termination of his employment. To addition, it required that it Hirschberg violated the present, be would have to pay HDO 150% of a particular client's fees from the fiscal your prior tn his departure from HDO. When Hirschberg resigned four years after bis promotion, be then provided accounting Bevices to several BDO clients the equivalent al $198.D in revenues to HDO in the year prior to his departare. The New York Court of Appeals examined DIYs agreement with Hirschberg to determine whether it is enforceable. The low is clear that, regardless of the actual language in the covenant, only reasonable restrictions will be enforced. A restraint is reasonable only if it: (a) is no greater than is required for the prutection of the legitimate interest of the empluyer. (2) does not e undue laudlation the employee (3) is not injurious to the public, The court scrutinized Hirschberg's covenant to determine whether BDO was indeed protecting a legitimate interest, and whether the covenant was tailored only as restrictively as necessary to protect that interest. The court ultimately held that the en was very bad bit prohibited Hirschberg from servicing all Do dnevom those Hirschberg himsel recruited prior to joining and those with whom Hirschberg had not developed any relationship as the result of his employment. Rather than simply discarding the overly broad covenant, however, the court next considered whether the Covenant could bave been enfoued to the extent that it was reasonable. I found no ensidence of BDO' deliberate werreeching, bad faith, or boereve shume of superior hargaininger. Because of this, the court remote-tatis, 'blue-perciled"- the covenant to effectively marzow it by precluding Hirschberg oily from servicing the clients with whom he had developed a relationships a result of his employment with BDO. The court then sent the case back to the trial judge to determine whether BDO was entitled to receive damages based on the formula of 15 of the dent's prior year's wense, as specified in the covenant This case demonstrates how valuable protective covenants can be in guarding an accounting firm's business interests. But DDO Se also highlights the impurtance o choosing appropriate covenants for given employees and carefully drafting such covenants so that they contain reasonable and clearly defined terms. In addition to being clearly defined, a firm's protestive.covenants must be reasonable in scope. As 800 Snow illustrated, mts will not enforce only bivad erwenants. The firms must be reasonable in defining their protected interests and their employees' pruhabited conduct. Pirms should autoretreach; if a court wees verreuching, coerciun, or bad faith by a firm, it may decline to partially enfonce the agreement and may simply throw out the protectie erant in entity. Questions 1. Do you believe covenants not to compete, such as the car in 2DO Sedown wre ethical? Du they violate any rules of Page 275 conduct in the AICPA Code
