An injunction, or injunctive relief, is a relatively common and very powerful tool in business law. You often see an injunctive relief clause in non compete agreements and other types of business contracts.
There can be other areas with injunctive relief is applicable, including disputes over inheritance and bankruptcy cases.
Injunctive relief offers a way to protect your company, assets, and livelihood in a variety of scenarios.
What Is Injunctive Relief
An injunction is a legal ruling that stops one party from continuing with a specific action. Injunctive relief is used when one party’s action can cause injury to the other party, professionally or financially.
Injunctive relief is filed through a civil court. A hearing date is set, and both parties stand before a judge to state their case in the matter.
If the judge rules in favor of the injunction, there will be a court order in place, preventing the defendant from continuing the action.
For instance, if an employer had a non compete agreement with a former employee, and they found that the former employee was breaching that agreement, an injunction would be filed.
In the case of non compete agreements, there are often very specific parameters because the former employee can’t be expected to remain unemployed for a prolonged period of time after leaving his or her position.
This is also why it’s important you read these agreements closely to protect your future career options.
That is only one example of the many ways that injunctive relief can be used legally. In general, injunctive relief is sought when awarding monetary damages would not be suitable to remedy the situation.
The action itself needs to be stopped in order to end the negative impact that the party is suffering from.
The Three Forms of Injunctive Relief
There are different types of injunctions that can be ordered, usually categorized by the amount of time that they’re enforced.
As the name would suggest, permanent injunctive relief does not have an expiration date. This would stop the party from pursuing a set activity on a permanent basis.
Temporary Restraining Order (TRO)
This is a temporary injunction. This stops a process for a set period of time. Most people are aware of TROs with regard to cases of domestic abuse, but it’s also a commonly used process to stop foreclosure proceedings.
This type of injunction is usually issued when a longer court case begins. The purpose is to stop one party from the action during the time that the case is ongoing, until the final ruling.
Injunctive Relief Examples in Business
Injunctive relief is often a remedy a business law lawyer uses to protect his client’s interests. There are often clauses drawn into contracts that spell out the rights of each party and point to an injunction as a possible remedy for breaching the agreement.
Here are some examples of how injunctive relief can be used to protect a company’s rights or protect an individual’s rights in business.
Injunctive relief might be sought by a company when a former employee is violating the terms of a non compete agreement.
Some examples of this might include stealing clients or other sensitive information which they then use in a competitive nature.
In some cases, former employees might go on their own with an independent business. Using contacts made through a former employer can be covered in a non compete agreement.
Other parameters to the agreement might be location-oriented, so the former employee can’t compete within a set geographic location.
Non compete agreements can preclude an employee from going to work for a direct competitor.
On the flip side of this coin, a former employee may seek to have an injunction from their former employer so that they cannot be precluded from earning an income in their field. Usually, in breach of contract cases, there is a preliminary or temporary injunction sought.
Intellectual Property Rights
Intellectual and copyright are their own areas of law, but these issues often intertwine with business law because the intellectual property in question is also a part of a business or service.
In these cases, an inventor or patent holder may seek to stop another competitor from using their design or intellectual property without consent.
In cases where the copyright holder’s intellectual property is stolen, they can often get a permanent injunction to stop the other entity from using their property permanently.
Breach of Fiduciary Responsibility
This can impact a business, an officer of a business, or an employee. Injunctions are sought to stop the person or entity from continuing to make financial decisions on behalf of another. For example, shareholders of a business might have the authority to invest in company funds.
If the company believes that this is no longer in their best interest, they can seek an injunction to prevent the shareholder from using their authority.
This can also apply to trustees and even real estate agents who have the authority to make deposits on behalf of a company.
An indiscretion in this area can have an immensely damaging impact on the company, so an injunction stops the process to protect their interests, as well as their clients’ interests.
Personal Financial and Property Examples of Injunctive Relief
Business law uses injunctive relief frequently, but it also offers a powerful tool in personal financial areas.
Here are some of the most common ways that injunctions are used to protect someone’s personal interests:
Asset Allocation in Divorce
Any family law attorney will tell you that the divorce process can be as unique as the couple. Allocation of assets is one area that can become contentious, especially for a couple that already holds some animosity for one another.
In cases of divorce, an injunction can be used to stop one spouse from selling or moving property before the court has ruled on which of the spouses are entitled to the property.
This might include artwork, automobiles, furniture, and any number of items that the couple acquired during their marriage.
In cases of bankruptcy, a temporary injunction may be issued to halt any foreclosures of property. This can be an essential tool for people who are using the bankruptcy law in order to save a family home from creditors.
Like divorce, inheritance issues can often be fraught with fighting over items and family issues. In cases where one party might want to stop another from taking personal items or assets that have not been legally awarded to them, an injunction can be sought.