Contracts: Defenses: [P] Public Policy

• Public Policy [covenant not to compete or an exculpatory clause]
• Court will invalidate or narrow a covenant not to compete that operates as a restraint of trade [consider both scope of & need for a covenant]

• SCOPE: whether court find that geographic and time restraints are reasonable. Policy is to balance freedom of contract with restraint of trade. The law treats restraint of trade with the same degree of suspicion.

• NEED: Is there a reasonable need for this protection? In NY covenant will be enforceable only against someone whose service are unique.

• An exculpatory clause (one that limits liability) can eliminate liability for negligence, but not for gross negligence or intentional torts.