The Analysis of Validity of Noncompetition Clauses in Employment Agreements

Sometimes employment contracts, regarding the specific relationship between employer and employee, contain noncompetition clauses whose validity has been debated and challenged to differing degrees. This research, in a comparative study, will at first clarify the general situation of noncompetition clauses in employment agreements and, then, analyze its conditions concerning validity and, finally, consider the terminating influence of the employment relationship on noncompetition clause. This paper shows clearly that, in legal systems such as Iran which have no detailed regulations on noncompetition arrangements, determining the limitations on their validity in a manner which finds a balance between the effectiveness of the clause and the matter of not imposing unreasonable constraints on an employee is extremely sensitive and difficult. Accordingly, regarding the Iranian legal framework, it provides some suggestions for addressing the issues of noncompetition clauses in employment agreements.