What Is an Injunctive Relief Clause?
Injunctive relief clause is a component of a contract that specifically orders both parties of the contract to refrain from doing an act that would cause harm.3 min read
2. Why Injunctive Relief Clauses Are Used
3. Do Injunction Clauses Work?
4. Equitable Relief
An injunctive relief clause is a component of a contract that specifically orders one party or both parties of the contract to refrain from doing an act that would cause harm to the other party. It is used in cases where there is no remedy for having caused the stated harm by exchanging money or other property of value, and the only way to prevent damage is to stop the stated action.
Injunctive Relief Clauses in Employment Contracts
Employment contracts often use the injunctive relief section. It is usually included toward the end of the contract, and it may be labeled “injunctive relief” or something similar. The employers' attorneys are responsible for drafting this section and making sure it is included.
The injunctive relief clause is typically used to prevent employees from violating non-compete orders, non-disclosure agreements, or confidentiality agreements. While most employees will never run into any difficulties or other issues with injunctive relief clauses, they need to pay attention to what they are signing and understand the language of the agreement.
Why Injunctive Relief Clauses Are Used
In the past, two types of court were used in the legal system. One was called “law courts,” and they were used for individuals or companies who were suing one another for money. The other type of court was called an “equity court.” In those courts, the entities or individuals were suing one another for justice or fairness, also known as “equity.”
In today's legal system there are not separate courts, but just one. Equity and money are still used as reparations for litigation. However, injunctive relief is a third type of reparation. It does not involve the exchange of money or other reparations, but just orders that person to stop whatever they are doing.
Employers use it to stop employees from passing along trade secrets to their competitors. They also use them to stop former employees from becoming competitors, which includes seeking out a company's clients to steal them away, or working for a competitor.
Employees can also use injunctive relief, although it's not common. They can go to court to force a former employer to stop an action that affects their future employment, such as attempting to blacken their reputation in the industry.
Do Injunction Clauses Work?
Injunctive relief is not always granted by the court. A judge must decide if the action that is subject to injunction truly creates a burden on the individual's future career or creates real hardship for the employer.
Injunction clauses in contracts can give the parties who sign the agreement a false sense of security, since approval for injunctions in court is not guaranteed. The main problems with injunction clauses include:
- It's difficult to know the nature of the action that the clause seeks to prevent.
- At the time a contract is signed, the parties may be unaware of the consequences of the actions that may be taken.
- Courts in the past have ruled that the clause in the contract does not necessarily provide enough support to order an injunction.
- Each situation is unique, and it is often difficult to determine the harm that may be caused by a breach of the agreement, or if it will truly be irreparable injury.
- An injunction clause does not provide evidence of the parties' intention.
- The presence of an injunction clause suggests that such a breach was anticipated, and therefore the parties should have taken more practical steps to prevent it.
- A court may rule that the breach is better compensated with a financial award rather than an injunction.
The term “equity” in legal terms means “fairness.” An equitable relief clause is another term for an injunctive relief clause, and is also called an irreparable harm or specific performance clause. There are four elements to this type of clause:
- Language that states that violating the terms of the agreement may result in damages or injury that are irreparable.
- A statement that reparations of monetary payments or other legal remedies would not be sufficient to make up for the breach.
- The intention by both parties that the plaintiff is entitled to relief in the form of an injunction or other appropriate reparation.
- A statement that the plaintiff is not required to post any type of bond
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