Purchase Agreements with Non-Compete Clauses

Posted on Jun 29, 2012

(This is the third of four posts discussing current issues with non-competition agreements that cross state lines. Companies and legal counsel must be sure to craft these agreements carefully. As I will explain in my fourth and final post of this series there is no “standard” agreement that can be used all the time regardless of the states involved. — Keith Sieczkowski)

Purchase agreements with non-compete clauses are often treated differently than regular employment. The reason to have the clause is apparent; however, the treatment of non-compete clauses is frustratingly disparate.

A person does not buy a business from someone to allow them to compete against him. Some states have separate provisions for business purchases, and others without separate statutes have generally put some judicial gloss on their decisions regarding enforceability to recognize the legitimate interest in having a non-compete in such situations.