In suits for breach of restrictive covenant agreements, such as noncompete and non-solicitation provisions, attorneys tend very often to focus their efforts on obtaining or defending against injunctive relief — both preliminary and final. Certainly, this early phase of a restrictive covenant lawsuit is critical because a primary purpose of such an agreement is to stop or limit a former employee or independent contractor from competing with an employer. But injunctive relief is only part of the story. Cases involving breach of a restrictive covenant agreement have the potential to result in extensive damages. Accordingly, it is imperative that attorneys on both sides of the dispute consider damages and plan a strategy from the beginning.
There generally are three types of damages available to plaintiffs in New Jersey for breach of a restrictive covenant. These include: (1) an accounting of the breaching party’s profits, (2) recovery of the nonbreaching party’s lost profits and (3) liquidated damages, where applicable.
Disgorgement of Breaching Party’s Profits
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