## Facts

- Marine Contractors Co., Inc. performed specialized marine repair work in the Boston area and within roughly 100 miles, using a small number of permanent supervisors and part-time crews assembled as needed.
- Thomas F. Hurley was a long-time employee and one of Marine’s permanent supervisors with knowledge of Marine’s operations and customers.
- Marine maintained an employee retirement plan and trust under which a departing employee’s vested share, if leaving before age 65 or disability retirement, would be held for five years before distribution.
- When Hurley notified Marine’s president (who also served as the trust’s sole trustee) that he intended to leave, Marine offered immediate payment of Hurley’s vested trust share in exchange for Hurley’s promise not to compete.
- On April 1, 1971, the parties executed a written noncompetition agreement stating the parties “set their hands and seals,” restricting Hurley from competing “in the business of marine specialist” within 100 miles of Boston until March 31, 1976.
- Hurley received his vested trust share (about $12,000) the same day.
- Within months, Hurley began performing similar marine-repair work in the Boston area, including work for some of Marine’s customers, and stated he did not intend to comply with the covenant.
- Marine filed a bill in equity seeking to enjoin Hurley from competing as provided in the agreement; a master’s report was confirmed, and the trial court entered an injunction enforcing the covenant. Hurley appealed.

## Issues

1. Whether the noncompetition agreement was enforceable despite Hurley’s claim of inadequate consideration, including whether it was a sealed instrument under Massachusetts law and whether accelerated payment of vested trust benefits supplied sufficient consideration.
2. Whether the five-year, 100-mile restraint was unreasonable as a restraint of trade, imposed undue hardship, or tended to create a monopoly, or instead reasonably protected Marine’s legitimate business interests.

## Decision

- The Supreme Judicial Court of Massachusetts affirmed the decree granting injunctive relief.
- The court held the agreement was a sealed instrument because it recited that the parties “set their hands and seals,” satisfying the statutory standard for a contract under seal.
- The court also held that, independent of the seal, adequate consideration existed because Marine paid Hurley immediately a vested trust share that otherwise would not have been available for five years.
- The court upheld the covenant as reasonable in time and geographic scope in light of Marine’s specialized market and the area in which it did business.
- The court concluded equitable enforcement by injunction (specific performance) was proper because Hurley was actively violating the covenant.

## Legal Principles

- In Massachusetts, an agreement reciting that the parties have set their “hands and seals” constitutes a sealed instrument under the governing statute.
- Acceleration of payment of vested retirement or trust benefits that otherwise would be deferred can be sufficient consideration for a post-employment noncompetition covenant.
- A post-employment noncompete is enforceable when it is ancillary to the employment relationship, protects legitimate employer interests (including customer relationships and protection against use of specialized knowledge), and is reasonable in duration and geographic reach.
- Equity may enforce a valid noncompete through injunctive relief when a former employee competes in breach of the covenant.

## Conclusion

The court enforced Hurley’s covenant not to compete, holding it was a sealed agreement supported by adequate consideration through immediate payment of deferred trust benefits and that its five-year, 100-mile restrictions were reasonable to protect Marine’s legitimate interests in a specialized, limited market.


Marine Contractors Co. v. Hurley, 365 Mass. 280, 310 N.E.2d 915 (1974)