COVENANTS NOT TO COMPETE
Generally, Colorado court have enforced Covenants Not to Compete (CNTC) only if narrowly drawn, such as being limited to a city or county limits. Many grievances and disputes have arisen over this subject. On rare occasion, the Colorado courts have upheld CNTC that is as wide as 200 miles (in one case) and statewide (in one case), but the permissible CNTC seems to be narrowly drawn from a geographical perspective. John Zodrow of Denver assembled this list of cases where the following CNTC were enforced as being valid:
Sprague’s Aetna Trailer Sales v. Hruz, 474 P.2d 216 (Colo. 1970) 75 miles/1 year
Zeff, Farrington & Assoc. v. Farrington, 449 P.2d 813 (Colo. 1969) 200 miles/3 years
Fuller v. Brought, 411 P.2d 18 (Colo. 1966) 45 miles/5 years
Freudenthal v. Espey, 102 P. 280 (Colo. 1909) city limits/5 years
Gold Messenger, Inc. v. McGuay, 937 P.2d 907 (Colo. App. 1997) 50 miles/3 years
Harrison v. Albright, 577 P.2d 302 (Colo. App. 1977) 50 miles/5 years
Taff v. Brayman, 518 P.2d 298 (Colo. App. 1974) 65 miles/ 2 years
Flower Haven, Inc. v. Palmer, 502 P.2d 424 (Colo. App. 1972) Boulder County/5 yrs.
Short v. Fahrney, 502 P.2d 982 (Colo. App. 1972 Denver City/2 years
Gibson v. Angros, 491 P.2d 87 (Colo. App. 1971) Boulder County/5 yrs
Wagner v. A&B Personnel, 473 P.2d 179 (Colo. App. 1970) 50 miles/1 year
Electrical Distributors, Inc. v. SFR, Inc., 166 F.3d 1074 (10th Cir. 1999) State of Utah
Note that, in relative terms, all of the terms and the geographical limitations are pretty narrow.
Mr. Zodrow also gathered the following list of Colorado cases where CNTC were not enforced (below). The presumption here is that a non-stated geographical limitation impliedly means nationwide, and is not enforceable.
Charles Milne Assoc. v. Toponce, 770 P.2d 1313 (Colo. App. 1988) no limits stated
National Graphics Co. v. Dilley, 681 P.2d 546 (Colo. App. 1984) no limits stated
It appears that, if is not invalidated outright, the court likely will reduce or suspend the nationwide CNTC to city limits (approximately). Note that courts may reform duration and geographic restrictions but are not required to do so:
Whittenberg v. Williams, 110 Colo. 418, 135 P.2d 228 (1943) worldwide reduced to part of Colorado
Gulick v. Strawn & Assoc., Inc., 477 P.2d 489 (Colo. App. 1970) restriction reduced from 35 miles of plaintiff’s offices to within 10 miles of Denver
National Graphics v. Dilley, 681 P.2d 546 (Colo. App. 1984) missing geographic restriction not supplied
Obvioulsy, each situation is unique. These examaples to not apply toContact a qualified attorney/law firm to evaluate your situation or needs.
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