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86 Tul. L. Rev. 713 (2011-2012)

handle is hein.journals/tulr86 and id is 719 raw text is: Devil Inside the Deal: An Examination of Louisiana Noncompete Agreements in Business Acquisitions Albert 0. Chip Saulsbury, IV* In a noncompete agmement, one party agrees with another to vfain fiam engaging in a paricular line of business or from soliciting customers ofanotherpeson. Buyes in husiness acquisitions seek these covenants because sellers, when not restricted by an enfoceable noncompete agmement, can destwy the value of the business sold through their own competitive acts Over the past twentyyears, Louisiana cous have inappmpiately applied the stwng public policy' requiring strict construction of noncompete agreements in the employment context to all noncompete ageements, includng those executed ancillary to the sale of a business. The application of this policy is inappmpnate, becamuse sellers have equal bargaining power and often receive a substantial amount of considemtion in the form of a purchase price This is often not the case foran ordinary employee who executes a noncompete agrement as a condition of his or her employment. The Louisiana courts' hostility toward noncompete agreements in a circumstances places doubt in the minds ofpotential buyers and has a chilig effect on deals in this state. Therefore, legislative reform is once again needed in this ara ofthe law ThisArticle chronicles the couts'misapplication ofthe strong public policy requiring strict construction of noncompetes in the employment context and argues that the neutral interpetive provisions of the Civil Code k articles on Conventional Obhgations am more appropiate fornoncompetes ancillary to business acquisitions. I. INTRODUCTION. ............................. .....714 II. DEVELOPMENT OF LOUISIANA NONCOMPETE LAW.................... 717 A. laitial Codification: Prohibition ofEmployer- Employee Noncompetes. .....................718 B. Early Juisprudence:- ContinuedApplication of the Reasonableness Test ........... ...... ......719 C 1989Amendment: Expanded Prohibition ofAll NoncompeteAgreements ....... ...............723 D Post-1989 Dralhng Fundamentals for Practitioners.........724 1. Term of Noncompetition .............724 2. Geographic Scope......................726 3. Severability Clause ................ .....727 * C 2012 Albert 0. Chip Saulsbury, IV Associate at Fishman Haygood Phelps Walmsley Willis & Swanson, LLP. J.D., Louisiana State University; B.A., Washington & Lee University. The author thanks Professors Christina M. Sautter and Melissa T. Lonegrass for their comments on earlier drafts. All views and errors herein are solely attributable to the author. 713

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