Bodyworks Case

Bodyworks’ non-compete clause satisfies the first four elements of enforceability but fails the fifth element because it is against “public policy.” In the early 1900’s, non-competition clauses were usually not upheld because these provisions were seen as a restraint of trade which was against public policy. See Mar-Hof Co. v. Rosenbacker, 97 S.E. 169 (N.C. 1918). North Carolina law says that “no contract or agreement hereafter made, limiting the rights of any person to do business anywhere in the State of North Carolina shall be enforceable unless such agreement is in writing duly signed by the party who agrees not to enter into any such business within such territory.” N.C. Gen. Stat. § 75-4. Over time though, North Carolina courts became more open to non-compete provision, but the covenant had to satisfy a five-part test to determine if it was enforceable. United Labs., Inc. v. Kuykendall, 370 S.E.2d 375, 380 (N.C. 1988). It is enforceable if it is (1) in writing; (2) made part of a contract of employment; (3) based on valuable consideration; (4) reasonable both as to time and territory; and (5) not against public policy. Id. The fifth element, not against public policy, is met when it is intended to protect a “legitimate interest” of the covenantee and is not so broad as to be “oppressive to the covenantor or the public health”. Iredell Digestive Disease Clinic, P.A. v. Petrozza, 373 S.E.2d 449, 453 (N.C. Ct. App. 1988). If honoring the contract would create a substantial harm to the public health, “the public interests outweigh the contract interests of the covenantee, and the court
Radford’s contract with Bodyworks are met and not disputable besides the fifth element. The covenant is clearly in writing, part of the contract of employment, and based on valuable consideration. Also, the court will find that the 2 years and 1 county limit is reasonable as to time and territory which is consistent with North Carolina