Contract Interpretation: Parol Evidence Rule Covenant Not to Compete

摘要

In 2005, David Sledge and Spencer Armour were working for a large drilling company. They entered into negotiations with the owner of Bandera Drilling to buy the company. Eventually an agreement is reached whereby Sledge and Armour pay $34,000,000 for six drilling rigs and other oilfield equipment. Part of the agreement is a covenant not to compete whereby Bandera and its owner agree not to compete in the oil or gas well contract drilling business with Sledge & Armour in an area: "West of the North/South line drawn through the Colorado City, Texas courthouse." The non-compete provision is to last for five years. Within that five year period, Bandera allegedly enters into a drilling contract within the geographic area and Sledge files suit seeking to enforce the noncompete provision. A partial settlement agreement is reached but does not deal with the enforceability of the non-compete provision. The trial court eventually grants Sledge's summary judgment that the provisionas geographically modified, is enforceable. Held: reversed. Texas, both statutorily and through the common law, has been somewhat hostile to covenants not to compete. Tex. Bus. & Com. Code § 15.50(a). An initial matter for the court is whether both sides' proffering of evidence as to the negotiation of the purchase and sale agreement is admissible.