An Active Non-Compete Agreement is essential in South African business contexts where protecting legitimate business interests is crucial. This document is commonly used when hiring senior executives, during business acquisitions, or when engaging key employees with access to sensitive information. The agreement must carefully balance the protection of business interests against the constitutional right to trade freely, as established in South African law. It typically includes specific provisions about restricted activities, geographic limitations, and duration, all of which must meet the reasonableness test established by South African courts. The document should be drafted with consideration of the Competition Act, Labour Relations Act, and relevant case law, particularly the principles established in the Magna Alloys case. Key elements include clear definitions of restricted activities, reasonable temporal and geographical limitations, and appropriate consideration for the restrictions imposed.
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1. Parties: Identification of the contracting parties, including full legal names, registration numbers for companies, and physical addresses
2. Background: Context of the agreement, including the business relationship between the parties and the legitimate business interests being protected
3. Definitions: Detailed definitions of key terms, particularly 'Confidential Information', 'Competitive Activity', 'Territory', and 'Restricted Period'
4. Scope of Non-Compete: Specific prohibited activities, including competing businesses, solicitation of customers/employees, and involvement in competing ventures
5. Duration and Territory: Clear specification of the time period and geographic area where restrictions apply, with justification for their reasonableness
6. Consideration: The compensation or benefit provided in exchange for the non-compete obligations
7. Acknowledgments: Party's acknowledgment of the reasonableness of restrictions and receipt of independent legal advice
8. Breach and Remedies: Consequences of breach, including available remedies such as interdicts (injunctions) and damages
9. General Provisions: Standard clauses including governing law, jurisdiction, entire agreement, and severability
1. Confidentiality Obligations: Detailed confidentiality provisions if not covered in a separate agreement
2. Garden Leave: Provisions for paid leave during notice period, typically used for senior executives
3. Non-Solicitation: Specific provisions regarding non-solicitation of employees, customers, or suppliers if needed to be emphasized separately
4. Survival of Obligations: Specific clause detailing which obligations survive termination of employment or business relationship
5. Independent Contractor Status: Clarification of relationship status if agreement is with independent contractors rather than employees
6. Assignment and Succession: Provisions for transferability of rights and obligations, particularly relevant for corporate restructuring
1. Schedule 1: Restricted Territory: Detailed map or list of geographic areas where restrictions apply
2. Schedule 2: Competitive Business Activities: Comprehensive list of specific prohibited business activities and competitor types
3. Schedule 3: Consideration Details: Breakdown of any financial compensation or benefits provided
4. Appendix A: Key Customers/Clients: List of specific customers or clients covered by non-solicitation provisions
5. Appendix B: Confidential Information Categories: Detailed categorization of information considered confidential under the agreement
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