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.