Ran, on the other hand, contends that the clause he agreed to amounts to an unenforceable non-compete provision. Ran relies primarily on E.W. Smith Agency, Inc. v. Sanger, 350 Mich. 75, 85 N.W.2d 84 (1957). Sanger involved a non-compete agreement whereby an insurance underwriter agreed not to engage in the same or similar line of business in Wayne County for a period of three years after leaving the employ of the plaintiff, which the Michigan Supreme Court ruled was an unenforceable promise under Michigan law pursuant to ยง 445.761.
Therefore, the transfer would not be for a valuable consideration as required by M.S.A. 28.66. In E.W. Smith Agency, Inc. v. Sanger, 350 Mich. 75, 85 N.W.2d 84 (1957), the Michigan Supreme Court unanimously refused to enforce a restrictive covenant which would have prohibited the defendant, an insurance salesman, from competing with plaintiff insurance agency, his former employer. To avoid the effect of M.S.A. 28.61, plaintiff argued that M.S.A. 28.66 was controlling because of a provision in the employment contract which gave plaintiff the right to purchase the defendant's rights in expiration, renewal and prospect records arising from insurance sold by him during his employment.
Michigan case law also evidences public policy against covenants not to compete. See Muma v. Financial Guardian, Inc., 551 F. Supp. 119, 122 (E.D.Mich. 1982); E.W. Smith Agency, Inc. v. Sanger, 350 Mich. 75, 85 N.W.2d 84, 86 (1957). Michigan law, however, makes a distinction between contracts which impose restrictions during performance of the contract and restrictions which extend beyond the expiration of the contract term.