The time limit of the non-compete clause

Comments on Special Appeal 2,185,015/SC

Abstract

The present commentary analyzes the judgment rendered by the Superior Court of Justice (STJ) in Special Appeal 2.185.015/SC, which addressed the enforceability of a non-compete clause lacking a temporal limitation. The dispute originated from a claim for specific performance between two children’s clothing stores which, following the dissolution of a partnership, agreed to commercial restrictions based on garment sizes, without, however, establishing a duration for such prohibition. The core legal issue lies in determining whether such a clause should be declared unlawful with retroactive (ex tunc) or prospective (ex nunc) effects, and whether the alleged defect affects solely the private interests of the contracting parties or also implicates the public interest and public order. In a decision authored by Justice Nancy Andrighi, the STJ overturned the ruling of the lower court, holding that the absence of a temporal limitation gives rise to a defect that primarily concerns private autonomy and the individual interests of the parties, rather than the protection of public policy as such. On this basis, the Court concluded that the unlawfulness of the clause cannot be declared ex officio, requiring an express request by the interested party and full observance of adversarial proceedings. The ruling further reaffirms that the enforceability of non-compete clauses is conditioned upon the cumulative fulfillment of four requirements: temporal, geographic, and material limitations, as well as adequate financial compensation. Finally, the study examines the application of the exception of non-performance of contract (exceptio non adimpleti contractus, Article 476 of the Brazilian Civil Code) to the specific case, given that both parties failed to comply with their contractual obligations.