This is a non-competition agreement which has been entered into by a company and a corporation. Whereas, in order to protect the company's interest in the business, the company's obligation to consummate the purchase agreement is conditioned upon the seller entering into this agreement and agreeing to the restrictive covenants contained within the agreement.
Sample Noncompetition Agreement between two Businesses
Category:
State:
Multi-State
Control #:
US-C-9038
Format:
Word;
Rich Text
Instant download
Description
Definition and meaning
A Non-Competition Agreement is a legal contract between two businesses that prohibits one party from engaging in certain competitive activities during a specified period after the agreement is signed. The purpose of this agreement is to protect proprietary information and ensure fair competition in the market. It typically outlines the restrictions on the seller and can include clauses regarding confidentiality, non-solicitation, and non-disclosure of sensitive information related to the business.
Key components of the form
The Sample Noncompetition Agreement includes several essential components that help define the terms and conditions of the contract. Key elements are:
- Parties involved: Identification of the businesses entering into the agreement.
- Confidentiality: An explanation of how proprietary information must be protected.
- Non-Competition Clause: Details on the restrictions regarding participation in competing businesses.
- Non-Solicitation Clause: Restrictions on soliciting customers or employees of the other party.
- Duration and Scope: Specific time frames and geographic limitations of the non-competition.
- Remedies for Breach: Consequences if either party violates the agreement.
Who should use this form
This Non-Competition Agreement is suitable for businesses that wish to protect their interests when engaging in transactions involving proprietary information or assets. Particularly, this form may be utilized by:
- Companies entering into agreements where one party is purchasing assets from another.
- Organizations concerned about employees or partners potentially competing after their association ends.
- Businesses that want to safeguard sensitive information and maintain a competitive edge in their industry.
Legal use and context
The Non-Competition Agreement is legally binding in many jurisdictions, provided it meets certain criteria. It typically requires that the terms are reasonable in scope, duration, and geographic restrictions. Understanding the legal context is crucial, as courts often scrutinize such agreements to ensure they do not unfairly limit an individual's right to work or engage in business. Legal advice is recommended when drafting or signing this type of agreement to ensure compliance with local laws.
Common mistakes to avoid when using this form
When utilizing the Sample Noncompetition Agreement, businesses should be cautious of several common pitfalls:
- Vague language: Ensure that all terms are clearly defined to avoid ambiguities.
- Unreasonable restrictions: Avoid broad or overly punitive terms that could make the agreement unenforceable in court.
- Ignoring state laws: Be aware of specific state regulations regarding non-competition agreements which may vary significantly.
- Failure to seek legal advice: Consulting with a legal professional can prevent potential issues in the agreement's enforceability.
What documents you may need alongside this one
Alongside the Non-Competition Agreement, you may need several other legal documents to complete the transaction or ensure comprehensive legal coverage, including:
- Asset Purchase Agreement: Outlines the terms of the asset sale between parties.
- Non-Disclosure Agreement: Protects confidential information shared during negotiations.
- Employment Agreements: Agreements with employees affected by the non-competition clauses.
- Partnership Agreements: If applicable, detailing the relationship between business partners.
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FAQ
In contrast, in many industries, a Non-Compete with a duration of 6-months will be considered reasonable, and therefore enforceable. The general rule is that the duration of the agreement should not exceed the time reasonably necessary to protect the employer's legitimate business interests.
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. Legal issues require less discovery, which can be the most costly part of litigation.
In contrast, in many industries, a Non-Compete with a duration of 6-months will be considered reasonable, and therefore enforceable. The general rule is that the duration of the agreement should not exceed the time reasonably necessary to protect the employer's legitimate business interests.
What is a noncompete agreement? Keep the group small. Keep the restrictions reasonable and narrow. Provide consideration for the agreement. Get it in writing. Prepare multiple versions if necessary. Concede choice of law/forum. Provisions to include.
A traditional non-compete stops an employee from working for a competitor in a certain geographical area for a certain amount of time after leaving the company. A non-solicitation agreement prevents an employee from poaching customers, contracts or other employees from the company that first hired them.
Study your competition. Write up the agreement. Have your agreement reviewed by a legal professional. Present the non-compete contract to your employee. If everyone is satisfied, sign and date the agreement.
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.
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.