Mere Inclusion of a Restrictive Covenant Does Not Invalidate Entire Contract

Wes-Garde Components Group, Inc. (“Wes-Garde”) and Carling Technologies, Inc. (“Carling”) executed an agreement on December 31, 1979, wherein Wes-Garde would receive “permanent favorable pricing” on certain electrical components manufactured by Carling, contingent upon maintaining annual threshold purchasing levels.  The contract was amended on January 1, 1988, and it stayed in effect until 2008.  The agreement between the two companies contained a covenant not to compete where Carling specifically agreed to refrain from entering the distribution market for certain electrical components.

Motion for Summary Judgement

Carling informed Wes-Garde on June 19, 2008 that it considered the agreement unenforceable and as such the company was under no contractual obligation to provide favorable pricing or abide by the non-compete provisions.  December 1, 2008 marked the first date that Carling actually failed to provide favorable pricing, per the contract, while transacting with Wes-Garde.  Wes-Garde ultimately sued Carling and requested that the court enforce the agreement.  Carling moved for summary judgment on the grounds that the whole contract was unenforceable because it contained an “unreasonable restraint of trade” in the form of a mutual covenant not to compete.

The Superior Court in the Judicial District of Hartford denied Carling’s motion for summary judgment and unequivocally rejected the argument that the mere inclusion of the mutual non-compete agreement necessitated the invalidation of an entire contract willingly executed by the parties.  The details of a specific non-compete agreement may render that portion of the contract unenforceable but there is not a principle under Connecticut law espousing the idea that the mere presence of a restrictive covenant invalidates an entire agreement.

The Court’s Decision

Wes-Garde opposed the motion for summary judgment on procedural grounds due to Carling’s failure to specify the ground on which it moved or make a specific reference to the covenant not to compete.  Carling’s pleading did not establish specific facts or allegations regarding the non-compete agreement nor did they identify it as the grounds for moving for summary judgment.

Carling failed to provide the court with the necessary information and the opportunity to evaluate the non-compete agreement based on its particular provisions.  The court could have ruled on the enforceability of the non-compete agreement had Carling introduced specific facts or pleadings regarding those contractual provisions.

Carling’s defense, where a party alleges that the inclusion of a covenant not to compete invalidates a whole agreement, is universally rejected by courts in Connecticut and cannot be successfully argued as an avenue to render an entire agreement unenforceable.

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