Georgia courts can’t extend noncompete agreement beyond its terms

The more things change, the more they stay the same. For example, even though Georgia’s law for noncompetes has changed, courts still refuse to extend their provisions beyond the terms drafted in the agreements. A recent state court of appeals ruling underscores the point.

How we got here

Georgia’s noncompete law had a major overhaul when the Restrictive Covenant Act (RCA) became effective in May 2011. The RCA applies to restrictive covenant agreements entered into after May 2011, whereas the state’s well-developed common law applies to agreements entered into before then.

Nevertheless, previous common-law themes play out time and again in Georgia courts’ interpretation of the RCA. One such theme is that a court isn’t allowed to extend a noncompete provision beyond the terms drafted in the agreement.

Facts

On June 22, 2016, Patriot Towing Services (PTS) purchased the assets belonging to D&D Autow’s, Inc., a full-service emergency towing company operated by Khosrow Daneshgari. As part of the purchase agreement, Daneshgari agreed not to compete with the buyer for a four-year period.

In sale-of-business contexts, Georgia law allows for noncompete time restrictions greater than two years within a 150-mile radius of the address. Accordingly, under the terms of the agreement between PTS and Daneshgari, the noncompete expired on June 22, 2020.