Appellate Court Orders Trial Judge To Rewrite Parties’ Non-Compete Covenant To Make It Enforceable

An asset purchase and sale agreement included unusual non-competition provisions. They authorized a court to redo any time, scope and area restrictions held to be unenforceable. 

The North Carolina Court of Appeals held that the covenant’s territorial restriction was overbroad. Notwithstanding the state’s “strict blue pencil doctrine,” which limits a judge’s authority to revise a non-compete clause, the appellate court directed the trial judge to rewrite the invalid restriction and then to try the issue of whether the clause was violated.  Beverage Systems of the Carolinas, LLC v. Associated Beverage Repair, LLC, No. COA 14-185 (N.C. App., 8/5/14) (Hunter, J., joined by McGee, J.; Elmore, J., dissenting).

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