State Law

Code of Alabama 1975-Title 8-Chapter 1-Article 10. Restrictive Covenants

06/11/2020 Alabama Section 8-1-190

Void contracts; contracts allowed to preserve protectable interests.

Restrictive Covenants

(a) Every contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind otherwise than is provided by this section is to that extent void.

(b) Except as otherwise prohibited by law, the following contracts are allowed to preserve a protectable interest:

(1) A contract between two or more persons or businesses or a person and a business limiting their ability to hire or employ the agent, servant, or employees of a party to the contract where the agent, servant, or employee holds a position uniquely essential to the management, organization, or service of the business.

(2) An agreement between two or more persons or businesses or a person and a business to limit commercial dealings to each other.

(3) One who sells the good will of a business may agree with the buyer to refrain from carrying on or engaging in a similar business and from soliciting customers of such business within a specified geographic area so long as the buyer, or any entity deriving title to the good will from that business, carries on a like business therein, subject to reasonable time and place restraints. Restraints of one year or less are presumed to be reasonable.

(4) An agent, servant, or employee of a commercial entity may agree with such entity to refrain from carrying on or engaging in a similar business within a specified geographic area so long as the commercial entity carries on a like business therein, subject to reasonable restraints of time and place. Restraints of two years or less are presumed to be reasonable.

(5) An agent, servant, or employee of a commercial entity may agree with such entity to refrain from soliciting current customers, so long as the commercial entity carries on a like business, subject to reasonable time restraints. Restraints of 18 months or for as long as post-separation consideration is paid for such agreement, whichever is greater, are presumed to be reasonable.

(6) Upon or in anticipation of a dissolution of a commercial entity, partners, owners, or members, or any combination thereof, may agree that none of them will carry on a similar commercial activity in the geographic area where the commercial activity has been transacted.

SeeĀ http://alisondb.legislature.state.al.us/alison/CodeOfAlabama/1975/Coatoc.htm?fireglass_rsn=true#fireglass_params&tabid=a4ba6a951c17aead&application_server_address=isolation1-us-east-1.wss.prod.fire.glass&popup=true&is_right_side_popup=false&start_with_session_counter=1