The International Management Group (IMG) is an organisation that is responsible for the identification, recruitment, and management of talent throughout the world. IMG has its headquarters in New York City. The company was established more than fifty years and it has grown to include branches in more than twenty-five countries. The Creative Artists Agency is an American talent organisation founded in 1975. Like the International Management Group, this organisation is responsible for the identification, recruitment, and management of talented people. The purpose of this paper is to investigate contract law in regards to the Creative Artists Agency and The International Management Group. Mathew Baldwin, a little-known agent, specialising in the representation of coaches, sparked a fight between the International Management Group and Creative Artists Agency when he left the former for the latter with crucial financial information.
A non-compete clause is also referred to as the “covenant not to compete.” According to Burnham (2009), it is an agreement between an employee and an employer. In this agreement, the employee promises not to engage in a business similar or related to that of their employer. Time and distance from the employer’s facilities are terms that may be used to qualify such a restriction. There are three elements of a valid non-compete agreement. Primarily, non-compete agreements should have a just and honest purpose. It should protect the interests of the employer from the actions of the employee and it should not restrict the public in any way. Moreover, a non-compete agreement should protect legitimate interest such as trade secrets and confidential information, among others. The skills, competencies, and experience that the employee gains from the employer should not be used to take away some of the employers opportunities such as clients. Lastly, the restrictions imposed by the non-compete agreement should be reasonable or practical (Burnham, 2009). Essentially, a valid non-compete agreement should not have sweeping and poorly defined restrictions that would put the employer at an advantage while hindering the employee’s opportunities or progress. The non-compete agreement between International Management Group and Mathew Baldwin did not prohibit him from working as an agent. However, it barred him from contacting IGM’s clients for two years. Therefore, it is a valid and reasonable contract (Burnham, 2009).
Accordingly, the blue pencil doctrine is applicable in countries where “common law” is widely practiced, and it allows the court to declare some aspects of a contract void while the rest of the contract is deemed valid. Nevertheless, the contract, without the discarded portions, should have the same meaning. On the other hand, the red pencil doctrine allows the court to declare the entire contract null and void (Burnham, 2009). Accordingly, the red pencil doctrine states may jeopardise the interests of employers who fail to construct proper non-compete agreements, which would favour the employees. In blue pencil states, the employer is widely assured that their interests will be protected from any competition arising from former employees to varying degrees (Burnham, 2009).
After leaving IMG, Matthew Baldwin lived and worked in California. The state of California does not strictly enforce the non-compete clauses and employees have relatively more freedom concerning where, and with whom, they choose to work with. However, Mr Baldwin may have lost the case because it was determined in Ohio (Burnham, 2009). Specifically, the state of Ohio adheres to most of the terms as outlined in non-compete contracts. Besides, the defendant admitted to taking information from his former employer, which is prejudicial and injurious to IGM’s day-to-day business dealings. The fact that Mathews wanted to be allowed to solicit IMG’s clients before two years elapsed is an indication that he was not operating in good faith.
References
Burnham, S. (2009). Contract law for dummies. New York: John Wiley & Sons
