Importance and Benefits of a Restraint of Trade Agreement
A Restraint of Trade Agreement is an essential legal tool that helps protect your business by restricting an employee’s actions after they leave your company. This agreement prevents former employees from engaging in competitive activities that could harm your business by leveraging sensitive information they may have gained during their employment.
This agreement is particularly important for employees who have access to trade secrets, client relationships, or other confidential business information that could be used to benefit a competitor or start a rival business.
Why a Restraint of Trade Agreement is Crucial:
1. Protects Business Interests
The agreement safeguards your business by preventing former employees from using confidential information, trade secrets, and client lists to benefit competitors or start their own competing businesses.
2. Legal Notification
It provides formal notice to employees that they are legally restricted in certain activities after leaving the company, ensuring they are aware of the consequences of breaching the agreement.
3. Maintains Client Relationships
The agreement helps protect your client base by preventing former employees from soliciting your clients or using existing relationships to their advantage.
4. Clear Terms
This agreement clearly outlines the scope of restricted activities, geographical limits, and the duration of the restrictions, ensuring all parties understand the terms.
5. Legal Protection
By creating a binding document, you gain legal protection, allowing you to take action in the event of a breach.
6. Opportunity for Negotiation
It gives the employee a chance to review and negotiate the terms before signing, ensuring mutual understanding and acceptance of the restrictions.
7. Legal Evidence
In case of a dispute, the agreement serves as clear evidence that the employer took proactive steps to protect their business interests.
8. Psychological Deterrent
The formal agreement can deter employees from engaging in competitive activities, as it emphasizes the seriousness of the restrictions.
9. Basis for Legal Action
If necessary, this agreement can form a strong basis for legal action, demonstrating that the employer provided clear terms that the employee failed to follow.
Download and Use
With Easy Contracts, obtaining a Restraint of Trade Agreement is simple and straightforward. After purchasing, you’ll immediately receive the fully editable Word document to customize and use as needed.
For added peace of mind, should an employee breach the agreement, our “Lawyer on Tap” service provides quick access to professional legal assistance to help you take further action.
After downloading, ensure the agreement is signed by the employee and keep a record of its delivery, ensuring you have evidence if it is ever needed.