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Restrictive covenants.

H A Thompson

    Texas Medicine
    |January 1, 1990
    PubMed
    Summary
    This summary is machine-generated.

    New Texas law addresses physician non-compete agreements, replacing the "common calling" test. It provides a framework for reforming overly broad restrictive covenants to ensure reasonableness and enforceability in medical practice sales and employment contracts.

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    Area of Science:

    • Law and Medicine
    • Healthcare Business
    • Employment Law

    Background:

    • Medical practice sales and physician employment contracts often include non-compete clauses, also known as restrictive covenants.
    • These agreements restrict sellers and employees from competing with buyers or former employers for a set duration.
    • Previous legal ambiguity surrounding these covenants prompted legislative review.

    Purpose of the Study:

    • To analyze the impact of a new statute on restrictive covenants in Texas.
    • To discuss the Texas Supreme Court's 1987 "common calling" test for covenant enforceability.
    • To review the statutory provisions for reforming overly broad non-compete agreements.

    Main Methods:

    • Review of Texas Supreme Court case law regarding restrictive covenants.

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  • Analysis of the newly enacted Texas statute concerning non-compete agreements.
  • Discussion of legal standards for covenant enforceability and reformation.

    • Main Results:

    • The new Texas statute abolishes the "common calling" test previously used to determine covenant enforceability.
    • The law introduces procedures for modifying broad restrictive covenants into reasonable ones.
    • This legislative change aims to clarify and standardize the application of non-compete agreements in the medical field.

    Conclusions:

    • The new statute provides a clearer legal framework for non-compete agreements in Texas medical practices.
    • Physicians and practice owners should be aware of the revised standards for covenant enforceability and reformation.
    • The law promotes a balance between protecting business interests and ensuring physician mobility.