This clause defines the consequences and remedies available when a party breaches a restrictive covenant—a promise to do or refrain from doing something (such as not competing with a business, not subletting property, or not using land for certain purposes). Restrictive covenants are binding obligations that "run with the land" or apply to specific parties, and this clause specifies what happens when someone violates them: whether the injured party can seek injunctive relief (a court order to stop the violation), claim monetary damages, or both. The clause matters because restrictive covenants are often the primary mechanism for protecting valuable business interests, property values, or competitive advantages, and without clear remedies, they become unenforceable promises. For example, a non-compete clause is worthless if the clause doesn't specify that breach triggers an injunction preventing the violator from competing.
The enforceability and practical utility of restrictive covenants depend heavily on how this clause is drafted. Courts are often reluctant to enforce restrictive covenants if they're overly broad or if the remedy clause is vague, so precision is essential. The clause should clarify whether damages are the sole remedy or whether injunctive relief is available, whether the covenant holder must prove actual damages, and whether breaches trigger automatic penalties or require court action.
If you're drafting or negotiating this clause, explicitly state that breaches are "irreparable" and that monetary damages are an inadequate remedy, which strengthens the case for injunctive relief. Include language allowing the non-breaching party to seek both injunctive relief and damages without having to choose one or the other. Define what constitutes a "material breach" versus a minor violation, and consider including a cure period (e.g., "the breaching party has 10 days to remedy the violation before remedies apply"). If you're the party subject to the covenant, negotiate for a reasonable scope (limited in time, geography, or scope of restricted activities) and ensure the remedy clause doesn't include automatic penalties or liquidated damages that are disproportionate to actual harm. Include a severability clause so that if one part of the covenant is found unenforceable, the rest survives.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause defines the consequences and remedies available when a party breaches a restrictive covenant—a promise to do or refrain from doing something (such as not competing with a business, not subletting property, or not using land for certain purposes).
Why should I care about this clause?
Restrictive covenants are binding obligations that "run with the land" or apply to specific parties, and this clause specifies what happens when someone violates them: whether the injured party can seek injunctive relief (a court order to stop the violation), claim monetary damages, or both.
What are my options?
The clause matters because restrictive covenants are often the primary mechanism for protecting valuable business interests, property values, or competitive advantages, and without clear remedies, they become unenforceable promises.
How does this affect small businesses?
For example, a non-compete clause is worthless if the clause doesn't specify that breach triggers an injunction preventing the violator from competing.