Non-compete clauses are common in commercial agreements, particularly in shareholders’ exit arrangements, corporate reorganizations, and franchise agreements. Their purpose is to preserve goodwill, know-how, and the customer base following the termination of a contractual or corporate relationship. Controversy typically arises when such clauses impose restrictions without a defined term, potentially affecting the exercise of economic activity on an indefinite basis.
The matter was addressed by the Third Panel of the Brazilian Superior Court of Justice (STJ) in 2025, in the judgment of Special Appeal No. 2,185,015/SC, which concerned non-compete obligations agreed upon between former shareholders of retail companies, without any specified duration.
In its ruling, the STJ reaffirmed that non-compete clauses are, as a rule, admissible in the business context, provided they comply with objective and proportional limits, particularly regarding: (i) the duration of the restriction; (ii) its scope, especially territorial reach; and (iii) its alignment with the legitimate purpose of protecting the business. In this context, the absence of a temporal limitation was deemed incompatible with the typical purpose of such clauses, as it imposes an excessive restriction on free enterprise and competition.
When examining the legal consequences of the lack of a defined term, the STJ clarified that this defect does not automatically render the clause void as a matter of law. According to the Court, the appropriate classification is voidability rather than absolute nullity. In practical terms, this means that the defect cannot be recognized ex officio without a request from the interested party and without due adversarial proceedings. On these grounds, the STJ set aside the lower court’s ex officio declaration of nullity, as there had been no specific claim or prior debate concerning the absence of a temporal limitation.
The decision underscores that non-compete clauses remain legitimate tools for the protection of business interests. However, their enforceability depends on clear parameters, particularly with respect to duration and purpose, always consistent with the contractual objective to be safeguarded. When drafted without due regard to these requirements, such clauses become more vulnerable in litigation. Although not automatically invalid, they are more likely to be judicially challenged, thereby increasing the risk of reduced effectiveness at the time enforcement is sought.