What is an Injunction and How Does It Work?

by
Richard Fonfrias, J.D.
Chicago’s Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC

An injunction is a court order that either demands or bars a specific action. In most cases, it orders one party to stop doing something that harms another party. For the first party to get an injunction, the party must show the court that no other solution is acceptable.

When deciding whether to issue an injunction, the court must weigh the first party’s need for it against the due process rights of the second party to conduct his activities.
In addition, in making its decision, the court may take into account the damage being done by one of the party’s action or inaction and weigh it against the rights of both parties. Injunctions are often used in situations involving business, real estate and contracts.

Types of Injunctions

Injunctions fall into three categories, depending on how long they are effective: temporary, preliminary, and permanent.

A Temporary Injunction, often referred to as a Temporary Restraining Order (TRO), is a court order demanding that someone stop taking action that could harm someone else for a period of time. TROs are often used in cases of domestic abuse and to postpone a trustee’s auction of real estate when the owner is behind in his payments.

A Preliminary Injunction is often issued at the beginning of a case to stop one party from continuing to take an action that might damage the other party while the case progresses. Preliminary injunctions are often used in restrictive covenants, like non-disclosure, non-solicitation and non-compete agreements.

A Permanent Injunction is often issued at the end of a trial and might continue the terms of a preliminary injunction by making it permanent.

Definition of Injunctive Relief
Injunctive Relief is a term used in contract law that means one party may try to stop another party from taking some type of action. For example, a non-compete agreement may say that a seller may pursue injunctive relief against a competitor, which means that a seller has the right to and will in fact go after an injunction.

Injunctions in Contract Violations

Often, injunctions are used when one party is thought to be violating a non-compete agreement and harming the other party. The party being harmed will try to get an injunction to stop his opponent from damaging him until the case can be heard by a judge. In this case, he would seek a temporary or preliminary injunction.

An injunction in a non-compete clause might work like this:

Jim has sold his electrical contracting business to Sam the Electrician. Jim signed a non-compete agreement that said he would not seek customers or operate as an electrician within 20 miles of Sam’s business for 4 years. Sam discovers that Jim has been working as an electrician within that 20 mile limit.

Every day that Jim works as an electrician in Sam’s area, he damages Sam’s business unless Jim can stop him. So Jim goes to court to get an injunction to stop Sam from working within the area described in the non-compete agreement.

Injunctions in Bankruptcy
In bankruptcies, injunctions are used to stop creditors from attempting to collect debts during the bankruptcy process. This injunction is called the automatic stay, which takes effect the moment the bankruptcy is filed and continues until the debts are discharged. If a creditor wants the automatic stay removed, it must petition the bankruptcy court.

Injunctions in Copyright and Patent Cases
In cases of copyright and patent violation, injunctions are commonly used to prevent damage to the holder of the copyright or patent until a judge can hear the case.
Before a court will issue an injunction to stop a copyright violation, the copyright owner must first register the copyright.
Before a court will issue an injunction to stop a patent violation, the patent holder must show:

• It has suffered irreparable injury;
• Legal remedies, such as money damages, are not adequate compensation;
• The balance of the parties’ hardships requires an injunction;
• The public interest is not hurt with an injunction.

Injunctions in Breaches of Fiduciary Duties

When business people are acting contrary to their fiduciary responsibilities, it may be necessary to get an injunction to stop their improper activities. For example, if a corporate board member is not acting in the interest of the corporation, an injunction may be required to bring his conduct in line with his responsibilities.