noncompetition clause

noncompetition clause

(1) A contract provision usually required by a buyer when purchasing a business. It prohibits the seller from engaging in a similar business in competition with the buyer. Courts will usually enforce such agreements if they are reasonable in a geographical area and time period. For example, Jack sells his property management business to Irene and agrees he will not open another property management firm anywhere in the same county for the next 3 years.In this way, Irene can be sure she will not lose existing or potential clients to Jack, and she will receive the full benefit of her bargain. (2) Some noncompetition clauses are designed to prevent employees from working for competitors.Courts disfavor such clauses.Most likely,if Irene wanted her employees to agree not to work for any other property management company in town,such a clause would be unenforceable.

References in periodicals archive ?
457(f) aimed at creating a substantial risk of forfeiture is to include a noncompetition clause in a terminating executive's employment agreement.
The partnership's billing practices, he said, "place me at great risk, without personal benefit, and without an avenue to change these practices, therefore jeopardizing the validity of my employment contract with CVSA," including the noncompetition clause.
In addition to the provision on termination, the contract also set forth a noncompetition clause whereby the employee agreed not to enter into any competing insurance business and not to write any policies for any persons who were clients of the former employer.
But in denying TeamWorks' effort to block the AIDS/LifeCycle from taking place, California superior court judge David Yaffe ruled on January 14 that state law may invalidate the noncompetition clause in TeamWorks' contract.
An absolute noncompetition clause must be drafted carefully to cover a reasonable time period and geographic area.
to nullify the effect of a noncompetition clause in his agent's agreement with the insurance company.
However, none of the agreements contained a noncompetition clause.
The concession includes a significant noncompetition clause prohibiting Canada from constructing or subsidizing a competing facility within 25 kilometers of the bridge;
In Miller, TC Memo 1993-55, Purchaser purchased all of the outstanding stock of a heating oil company (Target) for $105,000, under an agreement that included a noncompetition clause.
Therefore, the courts don't recognize noncompetition clauses or arguments that a former employee inevitably will reveal trade secrets (see "Inevitable Impediment," p.
For example, noncompetition clauses, if narrowly drawn, can be used to prevent an employee from going to work for an association that is a direct competitor (e.