Light v. Centel Cellular Co. of Tex

In Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642, 645, 37 Tex. Sup. Ct. J. 838 (Tex. 1994), a covenant-not-to-compete case, the supreme court held that consideration for a promise, by either the employee or the employer in an at-will employment, cannot be dependent on a period of continued employment. The court reasoned that such a promise would be illusory because it fails to bind the promisor, who always retains the option of discontinuing employment in lieu of performance. The court also stated, however, that "if only one promise is illusory, a unilateral contract can still be formed; the non-illusory promise can serve as an offer, which the promisor who made the illusory promise can accept by performance." The fact that the employer was not bound to perform because it could have fired the employee is irrelevant; if it has performed, it has accepted the employee's offer and created a binding unilateral contract. The Court identified three promises that were not illusory and therefore were capable of serving as consideration for an "otherwise enforceable agreement." Those promises were: (1) the employer's promise to provide "initial . . . specialized training" to the employee; (2) the employee's promise to provide 14 days notice to the employer to terminate employment; (3) the employee's promise to provide an inventory of all employer-owned property upon termination. 883 S.W.2d at 645-46. Nevertheless, the court ruled that the non-compete covenant that accompanied these promises was unenforceable because "while the employer's consideration (the promise to train) might involve confidential or proprietary information, the covenant not to compete is not designed to enforce any of the employee's return promises in the otherwise enforceable agreement." Id. at 647.