JOURNAL OF THE SOCIETY OF COSMETIC CHEMISTS within the same area of sensitivity. It is necessary then to consider the question: What are the component parts of an employment contract? All contracts, including employment contracts, necessarily require as a legal prerequisite that consideration be present as one of the significant requirements to establish the contract. In part, the consideration phrase of an employment contract typically reads as follows: In consideration of my employment with the XYZ Corporation and of the salary or wages paid for my services in the course of such employ- ment... The "employment" or the "hiring of the employee" is generally specified as such and these formal words are usually sufficient to establish consideration to sustain an employment contract between the employer and the employee. Many contracts for employment, however, go fur- ther and include with the "consideration" continuation of the employ- ment and payment of an unspecified compensation in the form of a wage or salary. Neatly set forth beneath the consideration clause there usually ap- pears the "I agree" clauses. Three basic clauses or covenants are found in almost all employment contracts, and these clauses usually present little or no problem between the employer and employee. The clauses obligate the employee to (a) keep, maintain, and make available com- plete and up-to-date records, (b) assign all new inventions and improve- ments of inventions, whether patentable or not, within the company's sphere of interest, and (c) cooperate and execute all necessary papers relating to the employee's inventions. The clauses which cause the greatest concern and difficulty in em- ployment contracts are those relating to (d) nondisclosure of trade secrets by the employee outside the company both during and after the period of employment, and (e) the covenant not to work in the same area for a competitor during a fixed number of years after termination of the employment. Use of these latter two clauses is considered justified by the courts so long as the clauses do not unreasonably restrain the em- ployee's right to earn a livelihood. Those clauses which unreasonably restrain or limit the employee's right to earn a livelihood will be struck down by the courts as contrary to public policy. It is quite certain in the law that any employment contract which goes beyond a reasonable degree to embrace anything and everything that an employee saw or learned during the period of his employment will

EMPLOYMENT CONTRACTS .97 be struck down by the courts. For example, unreasonable covenants have been held to be unenforceable by injunction under New jerse 7 law as established in the leading case of Sternberg rs. O'Brien (4). Al- though discussion of the unenforceability of the agreement in the case is dictum, the reasoning behind the decision has been repeatedly followed in New Jersey (5). The development of the law of employment contracts has resulted from an attempt by the courts over the years to balance two conflicting elements essential to our society. There is a strong policy favoring free competition, for an employee is entitled to use the skill and knowledge of his trade or profession which he has learned or developed in the course of any employment for the benefit of himself and the public, provided he does not violate a contractual or fiduciary obligation in doing so. On the other hand, in order to promote the orderly progress of science and the useful arts, the law provides certain protections as safeguards against breaches in employee incurred obligations. Among these protections are the patent and copyright statutes and the law of torts prohibiting unfair competition. The law protecting trade secrets is another related protection afforded by the law. An examination of the holdings of the common law dealing with em- ployment contracts will suggest the presence of a persistent distaste for all contracts in restraint of trade. Nevertheless, the courts usually up- held the validity of covenants by an employee not to compete with his former employer upon termination of the employment as well as the validity of covenants of a vendor of a business not to compete with the yendee. Obviously, an employee is more apt than a vendor to be coerced into an oppressive agreement, and therefore the courts were more apt to construe strictly the terms and provisions of a covenant ancillary to an employment contract. The more recent court holdings have considered the after-employ- ment or holdover clauses of an employment contract with a view toward what is considered to be the reasonableness of the provisions after ex- amination of all the pertinent facts. Overriding these basic policies are the more practical guidelines of time and area limitations, although most employment contracts do not contain specified area limitations. During the period of employment, the employee is bound by the non- disclosure clause and may not reveal any confidential information en- trusted to his confidence, even though such information is not specifically considered or classified by the employer as a trade secret. When, how- ever, the employee's services are terminated, his rights of disclosure are