2021 Georgia Code
Title 13 - Contracts
Chapter 8 - Illegal and Void Contracts Generally
Article 4 - Restrictive Covenants in Contracts
§ 13-8-54. Judicial Construction of Covenants

1. A court shall construe a restrictive covenant to comport with the reasonable intent and expectations of the parties to the covenant and in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement.
2. In any action concerning enforcement of a restrictive covenant, a court shall not enforce a restrictive covenant unless it is in compliance with the provisions of Code Section 13-8-53; provided, however, that if a court finds that a contractually specified restraint does not comply with the provisions of Code Section 13-8-53, then the court may modify the restraint provision and grant only the relief reasonably necessary to protect such interest or interests and to achieve the original intent of the contracting parties to the extent possible.

(Code 1981, §13-8-54, enacted by Ga. L. 2011, p. 399, § 4/HB 30.)

- For article, "Nearly a Decade Later: Surveying Georgia's 'New' Noncompete Law," see 26 Ga. St. B.J. 18 (Oct. 2020).

JUDICIAL DECISIONS

Choice of law provision.

- Trial court did not err in refusing to enforce a choice of law provision in the 2014 agreement containing restrictive covenants and by applying Georgia law rather than Delaware law because a choice of law provision would not be enforced if application of the clause contravened a strong public policy of Georgia; before the enactment of the restrictive covenants act, restrictive covenants in restraint of trade fell within that public policy exception if (1) at least one of the restrictive covenants violated Georgia public policy and (2) such a covenant would likely be enforced by the other state's court; and the act did not change the prior conclusion that unreasonable restrictive covenants were against Georgia public policy. Belt Power, LLC v. Reed, 354 Ga. App. 289, 840 S.E.2d 765 (2020).

- Because O.C.G.A. §§ 13-8-54(b) and13-8-53(d) direct that a court may modify a covenant if the court determines that the covenant is unreasonable, but applying those provisions is not mandatory, it is within a trial court's discretion whether or not to apply the blue pencil provisions. Belt Power, LLC v. Reed, 354 Ga. App. 289, 840 S.E.2d 765 (2020).

Construction with O.C.G.A. § 13-8-51. - Taken together, the clear and plain language of O.C.G.A. §§ 13-8-51(15) and13-8-54(b) compels a conclusion that any agreement that meets the definition of restrictive covenant under the Restrictive Covenants Act, O.C.G.A. § 13-8-50 et seq., and is otherwise not excepted from the Act's provisions, is subject to the terms of the Act and must comply with the terms of the Act. Restricting the Act's scope to merely the provisions that are explicitly mentioned in O.C.G.A. § 13-8-53 would render meaningless the majority of the broad definition of "restrictive covenant" located in O.C.G.A. § 13-8-51(15), which contains many more types of agreements. Belt Power, LLC v. Reed, 354 Ga. App. 289, 840 S.E.2d 765 (2020).

- Because O.C.G.A. §§ 13-8-51(15) and13-8-54(b) compelled a conclusion that any agreement that met the restrictive covenants act's definition of restrictive covenant, and was otherwise not excepted from the act's provisions, was subject to the terms of the act and had to comply with the terms of the act, and the employee no-hire and the employee no-solicitation covenants were clearly agreements to protect the former employer's interest in its employees, the act applied to those agreements; however, after considering the former employer's legitimate business interests, the trial court did not err when the court declined to use the act's blue pencil provision to modify the covenants to make the covenants enforceable. Belt Power, LLC v. Reed, 354 Ga. App. 289, 840 S.E.2d 765 (2020).