Section 4.35 Specific Performance of Negative Covenants

• Library: Contracts 2016 Supp

1. (§4.35) Specific Performance of Negative Covenants

Specific performance of an agreement to refrain from doing something takes the form of an injunction restraining the promisor from breaching their promise. The enforcement of negative covenants by use of injunctions is governed by the rules relating to specific performance. Rombauer v. Compton Heights Christian Church, 40 S.W.2d 545 (Mo. 1931).

A common negative covenant is an agreement by an employee not to compete with the employer upon the termination of employment. Although an equity court will not order specific performance of a personal services contract, it will enjoin an employee from performing the service for someone else if that restriction is included in a contract. State ex rel. Schoenbacher v. Kelly, 408 S.W.2d 383 (Mo. App. E.D. 1966). Of course, the employer must establish that the remedy at law is inadequate, and it will usually be held to be inadequate if the employee has acquired knowledge of trade secrets or has access to and influence over the employer’s customers during the term of employment. Renwood Food Prods., Inc. v. Schaefer, 223 S.W.2d 144 (Mo. App. E.D. 1949). The courts have refused to enforce a noncompetition agreement when the employment did not involve trade secrets and the employee did not acquire any influence over the employer’s customers. Ibur & Assocs. Adjustment Co. v. Walsh, 595 S.W.2d 33 (Mo. App. E.D. 1980); Mo-Kan Cent. Recovery Co. v. Hedenkamp, 671 S.W.2d 396 (Mo. App. W.D. 1984). When the employee has made customer contacts and has had the use of the employer’s customer lists, courts have enforced the noncompetition agreement. Cont’l Research Corp. v. Scholz, 595 S.W.2d 396 (Mo. App. E.D. 1980); Orchard Container Corp. v. Orchard, 601 S.W.2d 299 (Mo. App. E.D. 1980). The Supreme Court of Missouri has accepted this principle in a case in which a manager of operations for an automobile glass installer resigned and immediately accepted employment with a competitor. Osage Glass, Inc. v. Donovan, 693 S.W.2d 71 (Mo. banc 1985). The Court said that, “The purpose of the restriction is to keep the covenanting employee out of a situation in which he might be able to make use of contacts with customers to his former employer’s disadvantage.” Id. at 75. The Osage Glass Court distinguished Ibur, 595 S.W.2d 33, on the ground that in that case the employer had no protectable interest because the customers being solicited would not have been “repeat business.” Following...