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Why contract enforceability is so hard to predict

dvm360dvm360 November 2020
Volume 51
Issue 11

Many factors are at play in determining whether employment contract terms will stand up in court.

fizkes / stock.adobe.com

It’s perfectly natural for a client seeking legal advice to want a definitive answer to a straightforward question. “Will I lose my license if convicted of this second DUI?” Will my divorce take more than 6 months to finalize?"

Clients become frustrated when the truthful yet disappointing answer is, “It depends.” The immediate impression is that the attorney doesn’t have sufficient experience to render a confident and conclusive opinion. Or, the client may believe that the lawyer is hedging their bet, so that if the matter is not resolved to the client’s satisfaction, there can’t be any accusation that the client was promised a specific result.

The reality, however, is that certain aspects of the law are extremely difficult to predict and the refusal of a lawyer to provide a cut-and-dried answer to a seemingly simple question is a smart move because uncertainty is often built into our legal system. In no area of the law is this more true than in the realm of noncompetition/nonsolicitation law.

What questions arise most often?

Veterinarian clients frequently ask 2 types of questions. First, veterinarians preparing to take a job want to know if the proposed noncompete will actually be enforceable. Second, those who have already signed a contract containing a competition restriction want to know if it is possible to avoid having to comply with it.

Now and then, the answer is pretty clear and straightforward. But more commonly, the issue involves many more moving parts than the client realizes. Here’s why.

Inartful drafting

Some veterinary employment contracts are just abysmally written. When that’s the case, problems often befall the party trying to enforce the document. We see this often when an employer tries to create their own employment document or uses a boilerplate form from some internet site. And once in a while, a poorly drafted contract will be the product of an attorney who has minimal experience with such documents.

Badly written contracts generally (although not always) tend to favor employees. And if the agreement is overly burdensome, such as a 4-year duration or a full state in geographic coverage, it can be pretty safe to assure the burdened associate that the document will not be enforceable, at least as written.

Other contracts are doomed to unenforceability if they violate accepted state contract law. This often occurs where the agreement includes a financial penalty for breach. Sometimes a contract will fail because enforcement would violate reasonable public policy, such as where an associate is fired after working 2 weeks and the employer seeks to enforce the signed 2-year noncompete.

Most contracts are not that clear-cut

The real challenge in noncompetition law is figuring out how to advise clients when the contract in question is well crafted. These contracts are generally clear on their face, lack ambiguity, and are in compliance with both state common law (such as adequate financial consideration) as well as legislative mandate (such as a duration no longer than applicable state statutes permit).

When faced with a well-written employment contract, an attorney attempting to avoid noncompete enforceability must contend with a whole gauntlet of unknowns.

Dearth of case law

Judges are required to follow similar prior appellate cases that have been decided within their jurisdiction. For example, if a general dentist’s noncompete of 10 miles was held enforceable on appeal in Jones County, then future lower court judges generally must enforce 10-mile noncompetes against general dentists. It is very difficult to know what a judge will do if there are no similar appellate cases to look to for guidance. And veterinary noncompetes rarely reach the appellate stage—although this situation is likely to change in the future with the influx of corporate practice ownership.

Inclination and wherewithal of the parties

For better or worse, the outcome of a legal disagreement, including one over noncompetition, may well be determined by the endurance of the litigants. I often ask my contract clients if they feel they are as emotionally and financially prepared as their counter-party for noncompetition litigation. Sometimes the answer is surprising: An associate will go the distance, or the well-heeled employer will back down. More commonly, employers have the upper hand simply because they are more financially prepared for a court fight.

Legislative guidance

Judges are keenly aware of the political and philosophical climate during their term. Many judges feel they have a moral or legal responsibility to decide cases, at least in part, with deference to what they see as the state’s legislative agenda. Whether they agree with it or not, many jurists will try to follow that lead. For example, if a state legislature has been creating and implementing employee-friendly laws for a decade, a judge may feel compelled to align their decisions with that philosophy when interpreting contract terms. But not always. Other judges may adjudicate cases with an eye toward opposing an existing legislative agenda—and they are free to do so in the absence of relevant appellate guidance.

For these reasons, there is a great deal more to interpreting a contract than simply reading what attorneys call “the 4 corners of the document.” And of course, the assignment of a certain judge, the political climate of the state legislature, and numerous other factors demonstrate the ubiquitous input of lady luck.

Christopher J. Allen, DVM, JD is president of the Associates in Veterinary Law P.C., which provides legal and consulting services exclusively to veterinarians. He can be reached via e-mail at info@veterinarylaw.com. Dr. Allen serves on dvm360 magazine's Editorial Advisory Board.

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