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Suppose that I am the owner of a fully-owned private company in the USA. I am providing a full scholarship to a student from country X to go to the USA to do a 4-year PhD.

Can I add a clause to the scholarship contract that says that the student must go back to country X after finishing the PhD and will have to take a full-time job and work there for at least two years before re-entering the USA?

Is this clause enforceable from my position?

N.B. If they breach the clause by getting a job in the USA, they have to repay the scholarship amount.

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    Nobody can guarantee that they will get an academic full-time job.
    – Roland
    Feb 28 at 14:41
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    What's the point? They'll breach the clause, get a job in the US and repay you the scholarship.
    – Greendrake
    Feb 28 at 14:44
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    @greendrake What's the point of asking what's the point? It's a hypothetical question about how the law works, not an announcement of foolproof plan.
    – bdb484
    Feb 28 at 15:56
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    OP's scenario is commonly implemented as loan forgiveness programs: we will loan you tuition, and if you go work in some position (charitable, education, underserved community, government) for n years after, we will forgive your loan. If not, original loan repayment conditions stand.
    – user71659
    Feb 28 at 18:00
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    @Brian Quasi-charity: we sponsor somebody from $poorcountry if they go back and presumably make a positive change. The US government, often in collaboration with sponsoring foreign governments, has the same idea with J-1 visas that block the visitor from work or immigrant status until they return home for 2 years.
    – user71659
    Feb 28 at 20:52

1 Answer 1

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Such a clause is probably unenforceable

First, it’s borderline unconscionable, “extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience.” If such an argument can be made out, the clause is void.

Notwithstanding, it’s a restraint of trade clause and these are only valid to the extent that they legitimately protect the company’s interest. They are subject to strict time, geographic, and industry constraints - a blanket ban for 2 years over the entire US in all industries (as written, the guy can’t work as a barista) is clearly too broad. The clause would have to be narrowed to a much shorter time (say 6 months), only cover geographic areas where the company operated, and only restrict work that directly competes with the company.

Finally, it’s a penalty clause - the amount of damages required to be paid (the entire scholarship) is not a genuine pre-estimate of the damage the company will suffer if the term is breached. Such clauses are unenforceable as only governments are allowed punitive sanctions.

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    Accompanying training with a required work commitment is rather common, though typically the commitment is more restrictive than that proposed by OP (i.e., the recipient must either work for that company or repay the loan): Repaying the scholarship is a genuine estimate of the damage the company will suffer, because that's how much money the company spend with no reward. Why is OP's proposed contract less enfofrceable than similar committments commonly applied by US companies who pay for employee training?
    – Brian
    Feb 28 at 20:55
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    @Brian because OPs contract seems to bar someone from staying in the country they just spent years in to study and does not even offer them work in their home country.
    – Trish
    Feb 28 at 21:02
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    Unconscionable? That's actually what many J-1 visa holders are forced to do by law per INA 212(e). The penalty is different, though, they just can't get many of the other non-immigrant or immigrant visas, they don't have to pay back the scholarship.
    – jcaron
    Feb 29 at 1:08
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    "Basically the same idea": not at all, in the question no job is provided at all, neither in the US nor in the home country.
    – agemO
    Feb 29 at 8:15
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    @DaleM I don't know how the law works precisely but it sounds defensible that the student did not partially fulfill the contract, in the same sense that if I pay you $5 to go to the shops and buy me some milk, and you go to the shops, buy milk, and consume it entirely yourself, you can't then tell me you've done half the job and should get half the pay. Feb 29 at 14:11

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