NON-COMPETE AGREEMENTS: CIVIL LAW ASPECT

Abstract

The article is devoted to the problems of legal regulation of non-compete  agreements in the civil law of Ukraine. The author considers non-compete agreements as one of the types of negative obligations. Emphasis is placed on the insufficient regulation of the research subjects in the national legislation.

The author outlines the range of civil law contracts in which non-compete clauses are used in practice. The content of non-compete clauses in supply, distribution, agency, and lease agreements has been clarified. It is indicated that the ban on competition may concern the list of goods, the price of sale to other buyers, the territory of distribution of goods, counterparties under contracts.

It is emphasized that transactions concerning the conclusion of non-compete agreements can be disputed on the basis of violation of the principle of freedom of contract, freedom of entrepreneurial activity, restriction of civil capacity, and unlawful restriction of competition. The author proposes to apply to non-compete agreements the doctrine of reciprocal provision, which is the property of the Anglo-American legal family. Accordingly, the presence of material compensation of the obliged person in non-compete agreements ensures a balance of the interests of the parties.

The possibility of applying the legal provision of Part 3 of Art. 538 of the Civil Code of Ukraine on stopping or refusing to fulfill the counter obligation in case of violation of the non-competition condition is analyzed. The author emphasizes that the main effect of the violation of the non-compete agreement is the failure of the creditor to receive the income he was counting on. Since recovery of lost profits is problematic in national judicial practice, a proposal is put forward to take into account the possible amount of lost income when determining compensation for non-competition.

Non-competition agreements are characterized as negative obligations that are characterized by an intangible object, indivisibility, duration, personal nature, and the impossibility of forced performance in kind.