Man O War Restaurants, Inc. v. Martin

LAMBERT, Justice.

At issue here is the enforceability of a contract provision by which a corporate shareholder, who was also an employee of the corporation, was required upon termination of his employment to return his stock for the sum he originally paid. The trial court enforced the contract provision on grounds that the parties enjoyed broad freedom of contract and that no bad faith was shown in process of termination of the employment. The Court of Appeals reversed on the basis of public policy against forfeiture. In its view, the contract provision which required return of the stock…