Addressing an argument frequently encountered in restrictive covenant litigation, an Illinois Appellate Court recently reiterated that only a material breach of a contract containing a restrictive covenant will relieve the other party of its contractual obligation to abide by the restrictive covenant.
In the case InsureOne Indep. Ins. Agency v. Hallberg, the plaintiffs purchased assets of several insurance companies owned or controlled by James Hallberg, and subsequently hired Hallberg to become the company’s new president. Hallberg’s employment agreement – as well as the Asset Purchase Agreement (APA) that governed the original sale of assets – contained noncompetition and nonsolicitation clauses. The APA also contained details for computation and payment of the contingent purchase price, which was a portion of the overall purchase price based on renewal business from Hallberg’s former entities.