By:  Carona                                            S.B. No. 885

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to limitations on certain covenants.

 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-3           SECTION 1.  Section 15.50, Business & Commerce Code, is

 1-4     amended to read as follows:

 1-5           Sec. 15.50.  Criteria for Enforceability of Covenants not to

 1-6     Compete; CONSIDERATION.  (a)  Criteria.  Notwithstanding Section

 1-7     15.05 of this code, a covenant not to compete is enforceable if it

 1-8     is ancillary to or part of an otherwise enforceable agreement or

 1-9     otherwise valid transaction or relationship [at the time the

1-10     agreement is made] to the extent that it contains limitations as to

1-11     time, geographical area, and scope of activity to be restrained

1-12     that are reasonable and do not impose a greater restraint than is

1-13     necessary to protect the goodwill or other business interest of the

1-14     promisee.

1-15           (b)  Consideration.  A covenant not to compete made after

1-16     commencement of the underlying agreement, transaction, or

1-17     relationship must be supported by consideration other than the

1-18     continuation of the agreement, transaction, or relationship.

1-19           SECTION 2.  This Act takes effect September 1, 1997.

1-20           SECTION 3.  The importance of this legislation and the

1-21     crowded condition of the calendars in both houses create an

1-22     emergency and an imperative public necessity that the

1-23     constitutional rule requiring bills to be read on three several

 2-1     days in each house be suspended, and this rule is hereby suspended.