Noncompetition Agreement - Small Business
About this form
The Noncompetition Agreement for Small Business is a legal document that restricts the seller from engaging in any business activities that compete with the buyer's newly acquired business. This agreement is crucial for protecting the buyer's investment and ensuring that the seller does not leverage sensitive business information or customer relationships post-sale. It is designed specifically for small businesses, setting it apart from broader noncompetition agreements that may apply to larger entities or more complex business transactions.
Key parts of this document
- Parties involved: Identification of the seller and buyer.
- Non-competition covenant: Restrictions on the seller's business activities within a specified radius for a defined period.
- Enforcement: Details about obtaining an injunction in case of breach.
- Litigation provisions: Rights regarding attorney fees in case of legal disputes.
- Severability clause: Ensures that the remainder of the agreement remains enforceable if one part is found invalid.
- Governing law: Specifies the state laws under which the agreement will be interpreted.
When to use this form
This Noncompetition Agreement should be used during the sale of a small business when the seller wants to ensure that the buyer is protected from competitive actions post-sale. It is particularly relevant when valuable business assets, customer lists, or proprietary information are being transferred, and where competition could potentially harm the buyer's new business. This form is instrumental in setting boundaries and protecting the interests of both parties involved.
Intended users of this form
This form is typically used by:
- Business owners selling a small business who wish to restrict their ability to compete with the buyer.
- Buyers looking to protect their investment in a business acquisition.
- Attorneys assisting clients in drafting or reviewing agreements related to business sales.
Instructions for completing this form
- Identify the parties: Clearly state the names and business statuses of the seller and buyer.
- Specify the effective date: Fill in the date when the agreement takes effect.
- State the non-competition terms: Include the distance and duration during which the seller agrees not to compete.
- Include governing laws: Indicate which state's laws will govern the agreement.
- Sign and date: Ensure both parties sign the agreement and complete any required notary sections.
Does this document require notarization?
To make this form legally binding, it must be notarized. Our online notarization service, powered by Notarize, lets you verify and sign documents remotely through an encrypted video session.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Common mistakes to avoid
- Failing to specify the geographic area of non-competition clearly.
- Not defining the duration of the non-competition period appropriately.
- Omitting signature lines for both parties, making the agreement unenforceable.
- Neglecting to consider state-specific laws that may affect the agreement.
Benefits of completing this form online
- Convenience: Downloadable and easy to access anytime from anywhere.
- Editable: Fill in the required fields to tailor the agreement to your specific transaction.
- Reliability: Drafted by licensed attorneys, ensuring legal compliance and clarity.
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FAQ
A noncompete agreement is a contract between an employee and an employer in which the employee agrees not to enter into competition with the employer during or after employment. These legal contracts prevent employees from entering into markets or professions considered to be in direct competition with the employer.
The value of a non-competition agreement is represented by the present value of the cash flows that would be lost if the covenanter were to compete, adjusted for the effective probability that the covenanter would compete, and compete successfully.
A non-compete agreement guards against employees leaving for a competitor, starting a competing business, or sharing trade secrets.
The value of a non-competition agreement is represented by the present value of the cash flows that would be lost if the covenanter were to compete, adjusted for the effective probability that the covenanter would compete, and compete successfully.
Voiding a non-compete contract is possible in certain circumstances. For instance, if you can prove that you never signed the contract, or if you can demonstrate that the contract is against the public interest, you may be able to void the agreement.
On average, non-compete cases cost $10,000 or less. Many times an employer is seeking an injunction, which if the employer loses may result in a quicker resolution. Many times the issues are less factual and more legal.
Generally, if you violate a valid and enforceable non-compete agreement, it is likely that your employer will file a lawsuit against you.In very rare cases, the court may prevent you from working for a competitor for the duration specified in the non-compete.
In other words, non-compete agreements are not enforceable in California.Employees can void any non-competes that require a court outside of California to decide disputes. In other words, the company cannot enforce an employee's non-compete agreement in a state that allows these agreements.
Typically, the only way to fight a non-compete agreement is to go to court. If you are an employee (or former employee) who signed such an agreement, this means you must violate the agreement and wait to be sued. It may be that your former employer has never sued another employee to enforce the non-compete agreement.
