Section 60 Requirement of a Valid and Enforceable Contract

• Library: Emp-Emp Law 2000

An enforceable noncompetition agreement must be, or be a part of, what otherwise would be a valid and enforceable contract under general principles of contract law.

A valid noncompetition agreement can result from a memorandum signed by an employee that is later incorporated by reference into a formal written contract. American Pamcor, Inc. v. Klote, 438 S.W.2d 287, 290 (Mo. App. E.D. 1969).

When an employment contract containing a noncompete covenant expires by its own terms and the employee continues to work for the employer, the employer is precluded from enforcing the covenant when the employee terminates employment. Financial Guardian, Inc. v. Kutter, 630 S.W.2d 197, 198 (Mo. App. E.D. 1982).

The noncompete agreement must be supported by consideration. Typically, in the context of an employment agreement, the employer’s promise to hire the employee and pay a salary constitutes sufficient consideration for the employee’s covenant not to compete. In Reed, Roberts Associates, Inc. v. Bailenson, 537 S.W.2d 238, 240 (Mo. App. E.D. 1976), the court stated:

Clearly the defendant has given sufficient consideration to support a contract by his agreement to perform services as an employee of plaintiff


and to refrain from competition with plaintiff for a period of three years after termination of his employment. Plaintiff likewise agreed to employ defendant and pay him a weekly salary, amount to be mutually agreed upon.

It is important to remember that continuing to provide employment can constitute sufficient consideration for a noncompetition agreement. Id. at 241. Thus, a noncompetition agreement is valid even though it is entered some time after the employee was hired.

Employment agreements often provide that the employment relationship is terminable at the will of the employer. The issue sometimes is raised as to whether a noncompetition covenant may not be enforceable for lack of mutuality in view of the employer’s right to terminate the employment at will. But Missouri cases have held that noncompetition agreements are not void for lack of mutuality. USA Chem, Inc. v. Lewis, 557 S.W.2d 15, 24 (Mo. App. W.D. 1977); Deck and Decker Personnel Consultants, Ltd. v. Pigg, 555 S.W.2d 705, 707 (Mo. App. W.D. 1977). See also State ex rel. Schoenbacher v. Kelly, 408 S.W.2d 383 (Mo. App. E.D. 1966); House of Tools and Eng’g, Inc. v. Price, 504 S.W.2d 157, 159 (Mo. App. E.D. 1973); City Ice & Fuel Co. v. McKee, 57 S.W.2d 443, 447 (Mo. App. E.D. 1933).

Missouri has finally decided the issue of whether a noncompetition agreement...