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When a Restrictive Covenant Is (and Isn’t) Enforceable in Florida

In business, one element to achieving success is recognizing what kind of legal obligations your business dealings impose upon you… and what they don’t. Sometimes, the difference between winning and losing a contract case can be as straightforward as proving that an enforceable contract never existed at all. Whatever tool you need to win your commercial contract case, an experienced South Florida commercial litigation attorney can help get you where you need to be.

One way you may be able to escape liability in a breach of contract case is by showing that the agreement in question is void and not enforceable. A state court breach of contract case from right here in South Florida is a prime example.

A warehouse owner, seeking to sell a property, inked a listing agreement with a broker giving the broker a six-month exclusive window to obtain a buyer. An agent for the broker contacted the owner of the neighboring warehouse, but a deal was not consummated.

After the six-month timeframe expired, the seller hired a new broker, who again contacted the owner of the warehouse next door. Eventually, that owner purchased the warehouse for $1.4 million.

The broker sued the seller, the buyer, and the buyer’s company. The broker alleged multiple breaches, including the buyer’s breach of a confidentiality agreement between her and the broker.

The buyer and her legal team, however, were able to defeat the case against her. Specifically, she was successful because the confidentiality agreement in question qualified as a restrictive covenant under Section 542.335 of the Florida Statutes.

There are some situations in which a restrictive covenant can be valid and enforceable in Florida. Florida law has erected three requirements that a restrictive covenant must meet to be enforceable. First, “the restrictive covenant must be ‘set forth in a writing signed by the person against whom enforcement is sought’”; Second, the party seeking enforcement of the restrictive covenant “shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant”; and third, the party seeking enforcement of the restrictive covenant “shall plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction.”

The critical problem for this broker was the factor that might seem to be the most straightforward, which was the first one. When the broker presented the eventual buyer with the confidentiality agreement, she hand wrote her name and contact information below the signature line, but she did not actually place a signature on the document. Because there was no valid signature on the document, the agreement failed the first mandatory criterion for an enforceable restrictive covenant in Florida. As a result, the agreement was void, the buyer was successful, and the broker was owed nothing.

There are several reasons why you might not be responsible for fulfilling the promises spelled out in a contractual agreement. A restrictive covenant that’s void, an agreement procured using duress, and a contract obtained through fraud are just three examples. Whatever the facts are in your case, putting on a successful defense in a breach of contract case requires in-depth knowledge of your case and a detailed understanding of the law in Florida. Count on the experienced South Florida commercial litigation attorneys at Stok Kon + Braverman to provide you with the sort of intelligent, skillful, and zealous advocacy in your case.

Contact us online or by calling (954) 237-1777 to schedule your consultation.

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