Are employee non-compete agreements enforceable in New Mexico?
Yes, sometimes. New Mexico is a common-law reasonableness state for ordinary employee non-competes: the covenant must be reasonable in time, geography, and scope, and it must be tied to a legitimate business interest rather than a naked restraint on work.
Lovelace Clinic v. Murphy is the foundational New Mexico case. It enforced a physician covenant because the restrictions were reasonable, while recognizing the public's competing interests in both free competition and contract enforcement . Later cases restate the same basic frame: non-competes are ordinarily enforceable if the court deems the restraint reasonable .
That does not mean every New Mexico covenant is enforceable. The employer still needs valid consideration, a protectable interest, and a restraint no broader than needed to protect that interest. Covered health-care practitioners also have a statutory ban addressed later in this note.
Do not treat New Mexico as either a general ban state or an automatic-enforcement state. Start with consideration and then test the covenant against reasonableness, legitimate interest, employee hardship, and public impact.
Sources for this answer
Case law · 1966-08-22
A.1 Lovelace Clinic v. MurphyLovelace supports New Mexico's common-law rule that restrictive covenants in employment or professional association agreements can be enforced when the restrictions are reasonable.
All of the physician and surgeon cases either expressly hold or clearly indicate that the rights and duties created by the contract of employment or association are enforceable, if the restrictions thus imposed on the employee or the associate are reasonable.
See Lovelace Clinic v. Murphy, 76 N.M. 645, 417 P.2d 450 (1966).
Case law · 2000-02-11
A.2 Insure New Mexico, LLC v. McGonigleMcGonigle restates that New Mexico non-competes are ordinarily enforceable if a court deems them reasonable.
Non-competition covenants are ordinarily enforceable as long as a court deems them reasonable.
See Insure New Mexico, LLC v. McGonigle, 2000-NMCA-018, 995 P.2d 1053.
Case law · 1966-08-22
A.3 Lovelace Clinic v. MurphyLovelace frames the public-policy balance between avoiding unreasonable restraints and enforcing contractual obligations.
The public has an interest in seeing that competition is not unreasonably limited or restricted, but it also has an interest in protecting the freedom of persons to contract, and in enforcing contractual rights and obligations.
See Lovelace Clinic v. Murphy, 76 N.M. 645, 417 P.2d 450 (1966).
Is continued at-will employment enough consideration for a New Mexico non-compete?
Probably not by itself for an existing at-will employee. Piano v. Premier Distributing Co. was an arbitration-agreement case, not a non-compete case, but it states New Mexico's general consideration rule: continued at-will employment is an illusory promise and cannot supply consideration.
The new-hire and mid-stream situations differ. As a matter of general contract law, the initial offer of employment can itself serve as consideration for a covenant signed as a condition of being hired. The harder case is mid-stream: if an employer asks an existing at-will employee to sign a new non-compete after employment has already begun, Piano strongly supports requiring independent new consideration, such as a raise, bonus, promotion, equity grant, or other bargained-for benefit .
The key point is not that Piano decided a non-compete dispute. It did not. The point is that New Mexico contract formation requires consideration, and a promise that leaves the employer free to terminate at will places no real constraint on the employer's future conduct .
Do not rely on a bare recital of continued at-will employment for a mid-stream New Mexico covenant. Document the new consideration in the agreement, because if consideration is missing, New Mexico treats the agreement as never formed.
Sources for this answer
Case law · 2004-12-20
B.1 Piano v. Premier Distributing Co.Piano states New Mexico's general consideration rule that continued at-will employment is illusory and cannot be consideration.
Continued at-will employment is an illusory promise that cannot be consideration.
See Piano v. Premier Distrib. Co., 2005-NMCA-018, 107 P.3d 11.
Case law · 2004-12-20
B.2 Piano v. Premier Distributing Co.Piano explains why continued at-will employment is illusory: the employer's decision to continue employment placed no constraint on future conduct.
The implied promise of continued at-will employment placed no constraints on Defendant’s future conduct; its decision to continue Plaintiffs at-will employment was entirely discretionary.
See Piano v. Premier Distrib. Co., 2005-NMCA-018, 107 P.3d 11.
Case law · 2004-12-20
B.3 Piano v. Premier Distributing Co.Piano states the contract-formation elements that frame New Mexico consideration analysis.
A legally enforceable contract requires evidence supporting the existence of “an offer, an acceptance, consideration, and mutual assent.”
See Piano v. Premier Distrib. Co., 2005-NMCA-018, 107 P.3d 11.
Case law · 2004-12-20
B.4 Piano v. Premier Distributing Co.Piano supports the drafting risk that an agreement unsupported by consideration is not formed.
Because we conclude that the agreement is not supported by consideration, a contract was never formed.
See Piano v. Premier Distrib. Co., 2005-NMCA-018, 107 P.3d 11.
What legitimate business interests can support a New Mexico non-compete?
Specific proprietary interests can support a tailored restraint, especially confidential information and trade secrets. An employee's general skills and knowledge are not enough.
Insure New Mexico v. McGonigle is the leading caution on overclaiming ordinary employee knowledge. The employer had a confidentiality and trade-secret clause, but the court affirmed denial of a permanent injunction where customer information was not peculiar, current, or secret in the way the employer claimed .
The New Mexico Uniform Trade Secrets Act supplies the statutory backstop. It defines trade secrets by economic value from secrecy and reasonable secrecy efforts, and it authorizes injunctions for actual or threatened misappropriation . That makes NDAs, trade-secret controls, return-of-property duties, and targeted non-solicits important alternatives when a full non-compete would be too broad.
Do not draft a New Mexico non-compete as a penalty for leaving or as protection against ordinary competition. Tie the restraint to a specific interest, and keep the trade-secret strategy separate enough to stand even if the non-compete is narrowed or denied.
Sources for this answer
Case law · 2000-02-11
C.1 Insure New Mexico, LLC v. McGonigleMcGonigle supports that an employee's general skills and knowledge are not trade secrets.
General skills and knowledge do not rise to the level of trade secrets.
See Insure New Mexico, LLC v. McGonigle, 2000-NMCA-018, 995 P.2d 1053.
Case law · 2000-02-11
C.3 Insure New Mexico, LLC v. McGonigleMcGonigle supports denying trade-secret protection where customer needs and characteristics were not peculiar and did not require special information.
For this reason, there was substantial evidence supporting the trial court’s finding that the particular needs or characteristics of Plaintiffs customers were not peculiar and did not require special information.
See Insure New Mexico, LLC v. McGonigle, 2000-NMCA-018, 995 P.2d 1053.
Primary law
C.2 NMSA 1978, § 57-3A-2Section 57-3A-2 defines a New Mexico trade secret by economic value from secrecy and reasonable secrecy efforts.
"trade secret" means information, including a formula, pattern, compilation, program, device, method, technique or process, that: (1) derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
See NMSA 1978, § 57-3A-2(D).
Primary law
C.4 NMSA 1978, § 57-3A-3Section 57-3A-3 authorizes injunctive relief for actual or threatened trade-secret misappropriation.
Actual or threatened misappropriation may be enjoined.
See NMSA 1978, § 57-3A-3(A).
What duration and geographic scope are reasonable for a New Mexico non-compete?
There is no general statutory cap. New Mexico courts evaluate time and territory under a facts-and-circumstances reasonableness test, looking at the business, the market, the parties, the protectable interest, and public impact.
The cases show outcomes, not safe harbors. Lovelace upheld a three-year, Bernalillo County physician restriction as reasonable in the circumstances . KidsKare involved a dental covenant that a district court reduced from a one-hundred-mile restriction to thirty miles, with the court of appeals affirming the reformed covenant . Bowen upheld a much longer sale-of-business covenant, but that posture is more employer-friendly because it protects purchased goodwill .
For employment covenants, the safer drafting pattern is to match the radius to the employee's actual territory and the duration to the time needed to protect goodwill or confidential relationships. For sale-of-business covenants, the purchase price, goodwill, payout period, and buyer's need for protection can support longer restraints than would be defensible for an ordinary employee .
Do not copy a New Mexico duration or radius from another form. A term that worked in a physician-clinic, dental, or business-sale case may fail for a different employee if the employer cannot connect the time and territory to its actual protectable interest.
Sources for this answer
Case law · 1986-08-27
D.1 Bowen v. Carlsbad Insurance & Real Estate, Inc.Bowen supports evaluating reasonableness based on the facts of the particular case rather than fixed numerical caps.
Whether there is a reasonable restraint depends on the facts of a particular case, D. W. Trowbridge Ford, Inc. v. Galyen, 200 Neb. 103, 106 , 262 N.W.2d 442, 445 (1978), and is a matter of law for the courts to decide.
See Bowen v. Carlsbad Ins. & Real Estate, Inc., 104 N.M. 514, 724 P.2d 223 (1986).
Case law · 2015-03-25
D.2 KidsKare, P.C. v. MannKidsKare illustrates a district court reducing an overbroad dental covenant's geographic restriction from one hundred miles to thirty miles.
As its remedy, the district court reformed the 9 distance provision of clause one by reducing the radius to thirty miles, finding that 10 the covenant was thus enforceable.
See KidsKare, P.C. v. Mann, 2015-NMCA-064, 350 P.3d 1228.
Case law · 1966-08-22
D.3 Lovelace Clinic v. MurphyLovelace upheld the physician covenant's time and area limits as reasonable under the facts.
The limitations as to time and area in the covenant under consideration are clearly within the limitations upheld in the many 'cases above' cited and referred 'to in the A.L.R. annotations. • ■
See Lovelace Clinic v. Murphy, 76 N.M. 645, 417 P.2d 450 (1966).
Case law · 1986-08-27
D.4 Bowen v. Carlsbad Insurance & Real Estate, Inc.Bowen supports treating sale-of-business restraints more deferentially than employment restraints.
Courts are more reluctant to disturb restrictive covenants in buy-sell agreements than those in employment contracts.
See Bowen v. Carlsbad Ins. & Real Estate, Inc., 104 N.M. 514, 724 P.2d 223 (1986).
Case law · 1986-08-27
D.5 Bowen v. Carlsbad Insurance & Real Estate, Inc.Bowen states the New Mexico rule that sale-of-business restrictive covenants are valid when within reasonable time and space limits.
It is well-settled that a restrictive covenant is valid if it is within reasonable limits of time and space and ancillary to a sale of a business.
See Bowen v. Carlsbad Ins. & Real Estate, Inc., 104 N.M. 514, 724 P.2d 223 (1986).
Will a New Mexico court narrow or reform an overbroad non-compete?
Sometimes, but do not assume an inherent blue-pencil power. KidsKare upheld modification because the parties' agreement expressly authorized amendment of an unenforceable provision and enforcement to the maximum reasonable extent.
New Mexico's reformation rule is narrow. In KidsKare, the court of appeals expressly avoided deciding the broader argument about New Mexico case law on reformation because the contract itself supplied the basis for modifying the covenant .
The drafting takeaway is direct: include an express severability and reformation clause if the employer wants a court to enforce the covenant to the maximum reasonable extent. Even then, reformation is not a substitute for drafting a reasonable covenant in the first place.
Do not rely on a New Mexico court to rewrite a bare overbroad covenant. Include a clear reformation and severability clause, and draft the primary restriction narrowly enough that the court does not need to rescue it.
Sources for this answer
Case law · 2015-03-25
E.1 KidsKare, P.C. v. MannKidsKare upheld modification because the contract explicitly authorized amendment of unenforceable provisions and enforcement to the reasonable extent.
We hold that, contrary to the argument of Dr. Mann, the 11 covenant not to compete was amenable to modification by the district court because 12 the agreement explicitly provided for amendment of any unenforceable provision and 13 enforcement to the full extent deemed reasonable and enforceable by the reviewing 14 court.
See KidsKare, P.C. v. Mann, 2015-NMCA-064, 350 P.3d 1228.
Case law · 2015-03-25
E.2 KidsKare, P.C. v. MannKidsKare grounds reformation in the parties' bargain and mutual intent as expressed in the employment agreement.
Reformation of 5 unreasonable clauses was an aspect of the bargain of the parties and consistent with 6 their mutual intent as expressed by the employment agreement.
See KidsKare, P.C. v. Mann, 2015-NMCA-064, 350 P.3d 1228.
Case law · 2015-03-25
E.3 KidsKare, P.C. v. MannKidsKare did not decide whether New Mexico case law independently authorizes broader blue-pencil reformation.
Because we conclude that an alternative basis to alter the covenant not to 6 compete allows for disposition of this case, we do not reach Defendant’s argument 7 regarding New Mexico case law.
See KidsKare, P.C. v. Mann, 2015-NMCA-064, 350 P.3d 1228.
Does a New Mexico non-compete toll or extend during breach or litigation?
This is an open New Mexico question. The staged New Mexico non-compete cases and statutes do not squarely say that a court may automatically toll or extend a non-compete's restricted period while the former employee is allegedly breaching or while litigation is pending.
The existing cases enforce or reform fixed restraints under a reasonableness framework. Lovelace enforced a physician covenant through the end of the contract's three-year period . KidsKare upheld a reformed one-year and thirty-mile restraint based on the contract's reformation language and the district court's reasonableness findings . Neither case announces a tolling rule.
That silence matters. A contractual tolling clause should be drafted as its own restraint and tested for reasonableness, rather than assumed to revive or extend an expired covenant automatically.
Open question: New Mexico authority in this source set is silent on judicial tolling and contractual extension-on-breach clauses for non-competes. Draft any tolling clause narrowly, tie it to proven breach and legitimate interest, and do not assume a court will add time after the original period expires.
Sources for this answer
Case law · 1966-08-22
F.1 Lovelace Clinic v. MurphyLovelace illustrates enforcement of a fixed restricted period without announcing a tolling rule.
At the conclusion of the trial, judgínént was entered for the clinic restraining;.^nd enjoining Dr. Murphy from practicing viped-i-, icine, directly or indirectly, in Bernalillo, County from November 29, 1965, the .date, of the judgment, to and including January 31, 1967.
See Lovelace Clinic v. Murphy, 76 N.M. 645, 417 P.2d 450 (1966).
Case law · 2015-03-25
F.2 KidsKare, P.C. v. MannKidsKare illustrates enforcement of a reformed one-year and thirty-mile restraint without announcing a tolling rule.
As reformed by the district 7 court, the covenant not to compete was reasonable and enforceable.
See KidsKare, P.C. v. Mann, 2015-NMCA-064, 350 P.3d 1228.
Which New Mexico workers have special non-compete limits?
Covered health-care practitioners have the major New Mexico statutory limit. A non-compete that restricts a covered practitioner's right to provide clinical health-care services in New Mexico is unenforceable when the agreement, renewal, extension, or employment ends.
The covered practitioners include dentists, osteopathic physicians, physicians, podiatrists, certified registered nurse anesthetists, certified nurse practitioners, certified nurse-midwives, psychologists, physician assistants, and pharmacists . The statute is not limited to one profession. Psychologists, physician assistants, and pharmacists are covered for agreements, renewals, or extensions executed on or after the effective date of the 2023 act .
The statute leaves several tools available. It preserves repayment provisions for certain loans, relocation expenses, signing bonuses, recruiting, education, and training expenses when the practitioner worked for an initial period of less than three years . It also preserves nondisclosure provisions for confidential information and trade secrets, patient and employee non-solicitation provisions lasting one year or less, other lawful provisions, and reasonable liquidated damages .
Two additional limits matter. First, a covered clinical-services agreement cannot avoid New Mexico law through another state's law or an out-of-state litigation forum . Second, the chapter does not apply to agreements between health-care practitioners who are shareholders, owners, partners, or directors of a health-care practice .
Do not use ordinary common-law reasonableness to rescue a covered New Mexico health-care practitioner non-compete. If § 24A-4-2 applies, the non-compete provision is unenforceable, and drafting should shift to the statute's preserved tools: NDAs, capped non-solicits, repayment provisions, and reasonable liquidated damages.
Sources for this answer
Primary law
G.1 NMSA 1978, § 24A-4-2Section 24A-4-2 makes covered health-care practitioner non-competes unenforceable when they restrict clinical health-care services in New Mexico after the covered relationship ends.
A non-compete provision in an agreement, which provision restricts the right of a health care practitioner to provide clinical health care services in this state, shall be unenforceable upon the termination of: (1) the agreement; (2) a renewal or extension of the agreement; or (3) a health care practitioner's employment with a party seeking to enforce the agreement.
See NMSA 1978, § 24A-4-2(A).
Primary law
G.2 NMSA 1978, § 24A-4-1Section 24A-4-1 defines the covered health-care practitioners.
"health care practitioner" means: (1) a dentist; (2) an osteopathic physician; (3) a physician; (4) a podiatrist; (5) a certified registered nurse anesthetist; (6) a certified nurse practitioner; (7) a certified nurse-midwife; (8) a psychologist; (9) a physician assistant; and (10) a pharmacist.
See NMSA 1978, § 24A-4-1(B).
Primary law
G.3 NMSA 1978, § 24A-4-5Section 24A-4-5 states effective-date rules, including the 2023 expansion for psychologists, physician assistants, and pharmacists.
For psychologists, physician assistants and pharmacists, the provisions of Chapter 24, Article 1I NMSA 1978 [Chapter 24A, Article 4 NMSA 1978] apply to agreements, or renewals or extensions of agreements, executed on or after the effective date of this 2023 act.
See NMSA 1978, § 24A-4-5(D).
Primary law
G.4 NMSA 1978, § 24A-4-3Section 24A-4-3 preserves certain repayment provisions for practitioners employed for an initial period of less than three years.
Nothing in this act shall be construed to limit the enforceability of: A. a provision in an agreement requiring a health care practitioner who has worked for an employer for an initial period of less than three years to repay all or a portion of: (1) a loan; (2) relocation expenses; (3) a signing bonus or other remuneration to induce the health care practitioner to relocate or establish a health care practice in a specified geographic area; or (4) recruiting, education and training expenses;
See NMSA 1978, § 24A-4-3(A).
Primary law
G.5 NMSA 1978, § 24A-4-3Section 24A-4-3 preserves NDAs, one-year-or-less patient and employee non-solicits, and other lawful provisions.
Nothing in this act shall be construed to limit the enforceability of: A. a provision in an agreement requiring a health care practitioner who has worked for an employer for an initial period of less than three years to repay all or a portion of: (1) a loan; (2) relocation expenses; (3) a signing bonus or other remuneration to induce the health care practitioner to relocate or establish a health care practice in a specified geographic area; or (4) recruiting, education and training expenses; B. a nondisclosure provision relating to confidential information and trade secrets; C. a nonsolicitation provision with respect to patients and employees of the party seeking to enforce the agreement for a period of one year or less after the last date of employment; or D. any other provision of an agreement that is not in violation of law, including a provision for liquidated damages.
See NMSA 1978, § 24A-4-3.
Primary law
G.6 NMSA 1978, § 24A-4-4Section 24A-4-4 permits reasonable liquidated damages and voids unreasonably large liquidated damages as a penalty.
An agreement may provide for liquidated damages in an amount that is reasonable at the time the agreement is executed and in light of anticipated harm and difficulty of proving the amount of loss resulting from breach of the agreement by any party.
See NMSA 1978, § 24A-4-4(A).
Primary law
G.7 NMSA 1978, § 24A-4-2Section 24A-4-2 voids foreign choice-of-law and out-of-state litigation provisions in covered clinical health-care services agreements.
A provision in an agreement for clinical health care services to be rendered in this state is void, unenforceable and against public policy if the provision: (1) makes the agreement subject to the laws of another state; or (2) requires any litigation arising out of the agreement to be conducted in another state.
See NMSA 1978, § 24A-4-2(B).
Primary law
G.8 NMSA 1978, § 24A-4-5Section 24A-4-5 exempts agreements between health-care practitioners who are shareholders, owners, partners, or directors of a health-care practice.
Chapter 24, Article 1I NMSA 1978 [Chapter 24A, Article 4 NMSA 1978] does not apply to agreements between health care practitioners who are shareholders, owners, partners or directors of a health care practice.
See NMSA 1978, § 24A-4-5(A).
Will a choice-of-law or venue clause avoid New Mexico non-compete law?
Not for covered clinical health-care services agreements. New Mexico voids provisions that make those agreements subject to another state's law or require litigation in another state.
That statutory rule is specific and strong. If a covered health-care practitioner is providing clinical services in New Mexico, the agreement cannot contract around the New Mexico statute through foreign law or out-of-state venue .
Outside the health-care statute, the provided New Mexico source set does not contain a non-compete-specific choice-of-law rule. The practical question is therefore whether the forum court will apply ordinary contract and conflicts principles while also respecting New Mexico's reasonableness and public-policy limits for restraints that operate in New Mexico .
Do not use a foreign choice-of-law or out-of-state venue clause to draft around New Mexico's health-care practitioner statute. For non-health-care covenants, do not assume the clause controls unless the forum and public-policy analysis also supports it.
Sources for this answer
Primary law
H.1 NMSA 1978, § 24A-4-2Section 24A-4-2 voids foreign choice-of-law and out-of-state litigation provisions in covered New Mexico clinical health-care services agreements.
A provision in an agreement for clinical health care services to be rendered in this state is void, unenforceable and against public policy if the provision: (1) makes the agreement subject to the laws of another state; or (2) requires any litigation arising out of the agreement to be conducted in another state.
See NMSA 1978, § 24A-4-2(B).
Case law · 1966-08-22
H.2 Lovelace Clinic v. MurphyLovelace supports that New Mexico evaluates restrictive covenants against both contract-enforcement and competition public-policy interests.
The public has an interest in seeing that competition is not unreasonably limited or restricted, but it also has an interest in protecting the freedom of persons to contract, and in enforcing contractual rights and obligations.
See Lovelace Clinic v. Murphy, 76 N.M. 645, 417 P.2d 450 (1966).
Did the FTC's federal non-compete rule change New Mexico non-compete law?
No. A federal court set aside the FTC's 2024 nationwide Non-Compete Rule before it took effect, so New Mexico non-competes remain governed by New Mexico common law and the health-care practitioner statute.
Ryan LLC v. FTC set the rule aside with nationwide effect so that it would not be enforced or take effect . That federal overlay does not make any New Mexico covenant enforceable. It simply leaves the state-law analysis in place: ordinary employment covenants rise or fall under reasonableness, consideration, and protectable-interest rules, while covered health-care practitioner non-competes are governed by § 24A-4-2 .
Employers should still monitor federal agency enforcement and the New Mexico Legislature. But unless a new operative federal rule or New Mexico statute applies, the sources in this note remain the working framework.
Do not update New Mexico forms as though a nationwide FTC ban currently displaces state law. Keep applying New Mexico's reasonableness, consideration, protectable-interest, and health-care statute rules until an operative source changes that analysis.
Sources for this answer
Case law · 2024-08-20
I.1 Ryan LLC v. Federal Trade CommissionRyan supports the rule that the FTC Non-Compete Rule was set aside and did not take effect.
The Non-Compete Rule, 16 C.F.R. § 910.1–.6, is hereby SET ASIDE and shall not be enforced or otherwise take effect on September 4, 2024, or thereafter.
See Ryan LLC v. Fed. Trade Comm'n, 746 F. Supp. 3d 369 (N.D. Tex. 2024).
Case law · 1966-08-22
I.2 Lovelace Clinic v. MurphyLovelace supplies the New Mexico common-law reasonableness rule that remains the baseline for ordinary employment covenants.
All of the physician and surgeon cases either expressly hold or clearly indicate that the rights and duties created by the contract of employment or association are enforceable, if the restrictions thus imposed on the employee or the associate are reasonable.
See Lovelace Clinic v. Murphy, 76 N.M. 645, 417 P.2d 450 (1966).
Primary law
I.3 NMSA 1978, § 24A-4-2Section 24A-4-2 supplies New Mexico's health-care practitioner non-compete ban.
A non-compete provision in an agreement, which provision restricts the right of a health care practitioner to provide clinical health care services in this state, shall be unenforceable upon the termination of: (1) the agreement; (2) a renewal or extension of the agreement; or (3) a health care practitioner's employment with a party seeking to enforce the agreement.
See NMSA 1978, § 24A-4-2(A).
Are sale-of-business non-competes treated differently in New Mexico?
Yes. New Mexico is more willing to enforce a reasonable covenant tied to the sale of a business than an ordinary employment covenant, because the buyer is paying for goodwill and protection from the seller's immediate competition.
Bowen v. Carlsbad Insurance & Real Estate upheld a fifteen-year, fifteen-mile covenant connected to the sale of an insurance business. The court focused on the purchase price, the payout period, the nature of the insurance business, the seller's prominence, and the goodwill the buyer purchased .
The sale context does not eliminate reasonableness. It changes the facts that support reasonableness: a buyer who paid for a going concern can often justify broader protection than an employer seeking to restrain a departing employee.
Do not use an employment covenant form for a New Mexico business sale. Draft the covenant around the purchased goodwill, the seller's role, the buyer's actual market, the purchase price, and the payout structure, because those facts drove the result in Bowen.
Sources for this answer
Case law · 1986-08-27
J.1 Bowen v. Carlsbad Insurance & Real Estate, Inc.Bowen states the rule that sale-of-business restrictive covenants are valid when reasonable in time and space.
It is well-settled that a restrictive covenant is valid if it is within reasonable limits of time and space and ancillary to a sale of a business.
See Bowen v. Carlsbad Ins. & Real Estate, Inc., 104 N.M. 514, 724 P.2d 223 (1986).
Case law · 1986-08-27
J.2 Bowen v. Carlsbad Insurance & Real Estate, Inc.Bowen supports greater reluctance to disturb sale-of-business covenants than employment covenants.
Courts are more reluctant to disturb restrictive covenants in buy-sell agreements than those in employment contracts.
See Bowen v. Carlsbad Ins. & Real Estate, Inc., 104 N.M. 514, 724 P.2d 223 (1986).
Case law · 1986-08-27
J.3 Bowen v. Carlsbad Insurance & Real Estate, Inc.Bowen enforced the sale-of-business covenant as written because it was voluntary, supported by consideration, and reasonable in context.
The covenant should be enforced as written; it being entered into voluntarily and for consideration.
See Bowen v. Carlsbad Ins. & Real Estate, Inc., 104 N.M. 514, 724 P.2d 223 (1986).