enforcing ten-year non-compete covenant as “essential . . . consideration” in the purchase of the business
How later courts described this case
- enforcing ten-year non-compete covenant as “essential . . . consideration” in the purchase of the business
- shareholders and directors could ratify president’s action outside the scope of his authority
Written by the judges who cited it.
The opinion
Darrell Hickman, Justice, dissenting. I find the duration of ten years is unreasonable. The cotton gin case of Robins v. Plant, 174 Ark. 639 , 297 S.W. 1027 (1927), used by the majority, is, in my judgment, somewhat out of date in today’s commercial market. Ten years is simply too long to restrict any kind of trade.
There is no doubt that the community of Madison County will suffer unless the appellees receive fair competition and that is essentially what the appellees propose to prevent. I expect the majority may be deeply influenced in its judgment by the fact that the appellants were knowledgeable, well informed businessmen who should have known what they were signing when they made and entered into the written agreement, and should not readily be able to break it. But to me that is a moral and not a legal consideration. The appellants cannot be bound by such an agreement in a court of law because the contract is an unreasonable restraint on trade. We cannot make it reasonable in time because to do so would be to draw a new contract for the parties, which we do not have the power to do. Rector-Phillips-Morse, Inc. v. Vroman, 253 Ark. 750 , 489 S.W.2d 1 (1973). Therefore, I would declare it void.