Perhaps no contractual clause invites as little respect as the noncompete agreement. In a few states, the agreement is void and unenforceable. In the remaining states, a noncompete agreement scarcely rises to the level of a legally enforceable contract. The traditional elements of contract formation are not found in a noncompete agreement. One often finds neither a bargained-for exchange nor a meeting of the minds in these agreements. Too often, the parties to a noncompete agreement do not believe that the agreement will be enforced according to its terms.
Similarly, courts give little credence to the agreement as it is actually written. Often, in those states that permit enforcement of noncompete agreements, the language of the agreement represents a mere starting point. In most jurisdictions, courts routinely "blue pencil" or reform covenants that are not reasonable, as determined by a multipart test. The blue pencil doctrine gives courts the authority to either (1) strike unreasonable clauses from a noncompete agreement, leaving the rest to be enforced, or (2) actually modify the agreement to reflect the terms that the parties could have-and probably should have-agreed to.
This Article proposes that courts put an end to the blue pencil doctrine. The blue pencil doctrine violates basic contractual principles and has been used to alter nonconcompete agreements in two ways. First, some courts intrude into what should be negotiated agreements between the parties by substituting the courts' own contract terms for those found in the agreements. Second, other courts have altered noncompete agreements by striking "unreasonable" clauses and leaving the rest of the agreement as written. Both scenarios essentially turn courts into attorneys after the fact. Worse yet, the blue pencil doctrine, because it creates an agreement that the parties did not actually agree to, does nothing to address the underlying problems of noncompete agreements. Several states already follow this "no-modification" rule. Wisconsin has even mandated the no-modification approach by statute.1 Moreover, eliminating the blue pencil doctrine comports with recent trends as courts have indicated a greater willingness to refuse to reform agreements that are not reasonable on their face. 2 As will be seen herein, several recent decisions indicate that judges have grown increasingly leery of reforming unenforceable restrictive covenants and have been unwilling to aid employers who overreach. With this in mind, courts everywhere should seize this opportunity to end to the practice. It is time to put the blue pencil down.
Griffin Toronjo Pivateau,
Putting the Blue Pencil Down: An Argument for Specificity in Noncompete Agreements,
86 Neb. L. Rev.
Available at: https://digitalcommons.unl.edu/nlr/vol86/iss3/4