Legal Question in Business Law in California

Re: Covenant not to compete

Keep in mind that even if it's ultimately unenforceable, that doesn't mean you can't be sued over an alleged violation.

Re: Covenant not to compete

It's not very likely to be enforceable as a covenant not to compete, as such clauses are very difficult to enforce, except in limited situations (and this does not appear to be one of them - for example, where the covenanting party is a major shareholder in the company).

However, if you were to use confidential information to your benefit and/or to the detriment of the disclosing party, you could simply be sued under a common law claim of breach of contract, breach of fiduciary duty, interference with prospective business advantage, just to name a few.

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Re: Covenant not to compete

Need to know more, but it is probably overbroad.

Joel

Re: Covenant not to compete

Clause (a) of the quoted language is a covenant not to misappropriate trade secrets; it is enforceable as long as the "secrets" have any economic value or relevance, and this could be more or less than ten years. Its enforceability depends upon there being something legally worthy of being protected, and the protection arises by operation of statute without any real necessity for this clause to appear in the contract.

Clause (b) is a covenant not to engage in a trade, business or occupation. This is where the test of reasonableness you were suggesting would apply. Such clauses are generally legal only when used in connection with the sale of a business, in which the seller (the Vendor here?) receives consideration for the goodwill of the business sold. The restriction must be reasonable and not overbroad. Such clauses used in any context other than the sale of a business are probably void ab initio. Even in the sale of a business, ten years with no geographical limit would be overbroad is most circumstances, but possibly the benefitted party could prove that the clause was truly necessary to protect a substantial investment in very durable goodwill.