Reasonableness Determinations Restricting Competition; Presumptions

  1. Law
  2. Georgia Code
  3. Contracts
  4. Illegal and Void Contracts Generally
  5. Restrictive Covenants in Contracts
  6. Reasonableness Determinations Restricting Competition; Presumptions

Checkout our iOS App for a better way to browser and research.

In determining the reasonableness of a restrictive covenant that limits or restricts competition during or after the term of an employment or business relationship, the court shall make the following presumptions:

  1. During the term of the relationship, a time period equal to or measured by duration of the parties' business or commercial relationship is reasonable, provided that the reasonableness of a time period after a term of employment shall be as provided for in Code Section 13-8-57;
  2. A geographic territory which includes the areas in which the employer does business at any time during the parties' relationship, even if not known at the time of entry into the restrictive covenant, is reasonable, provided that:
    1. The total distance encompassed by the provisions of the covenant also is reasonable;
    2. The agreement contains a list of particular competitors as prohibited employers for a limited period of time after the term of employment or a business or commercial relationship; or
    3. Both subparagraphs (A) and (B) of this paragraph;
  3. The scope of competition restricted is measured by the business of the employer or other person or entity in whose favor the restrictive covenant is given; provided, however, that a court shall not refuse to enforce the provisions of a restrictive covenant because the person seeking enforcement establishes evidence that a restrictive covenant has been violated but has not proven that the covenant has been violated as to the entire scope of the prohibited activities of the person seeking enforcement or as to the entire geographic area of the covenant; and
  4. Any restriction that operates during the term of an employment relationship, agency relationship, independent contractor relationship, partnership, franchise, distributorship, license, ownership of a stake in a business entity, or other ongoing business relationship shall not be considered unreasonable because it lacks any specific limitation upon scope of activity, duration, or geographic area so long as it promotes or protects the purpose or subject matter of the agreement or relationship or deters any potential conflict of interest.

(Code 1981, §13-8-56, enacted by Ga. L. 2011, p. 399, § 4/HB 30; Ga. L. 2019, p. 1056, § 13/SB 52.)

The 2019 amendment, effective May 12, 2019, part of an Act to revise, modernize, and correct the Code, revised punctuation near the end of the introductory language of paragraph (2).

Law reviews.

- For article, "Contracts: Illegal and Void Contracts Generally," see 28 Ga. St. U.L. Rev. 21 (2011).


Download our app to see the most-to-date content.