Use Of A Non-Compete Agreement

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A non-compete clause can also be used to prevent a business owner from soliciting customers of a business they have just sold. It`s unfortunate that business owners sometimes sell their business profitably just to turn around and reopen a nearby competing business that serves the same clientele. This creates an unfair advantage, as the company […]

Oct 13
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A non-compete clause can also be used to prevent a business owner from soliciting customers of a business they have just sold. It`s unfortunate that business owners sometimes sell their business profitably just to turn around and reopen a nearby competing business that serves the same clientele. This creates an unfair advantage, as the company has access to all of its old customer information and can market it directly to that customer base. A non-competition clause may legally prevent the seller of an undertaking from opening a competing business at a specified interval or within a specified period after the sale. This ensures that the newly acquired business is not subject to unfair competition from the original owner. When an outgoing worker infringes an enforceable non-competition clause, the employer has the possibility to bring an action against him. However, not all States impose competition bans in the same way, so it is important to review state legislation first. Already in Dyer`s Case in 1414, English Common Law decided not to impose restrictions of competition because of their nature as trade restrictions. [4] This prohibition remained unchanged until 1621, when it became apparent that a restriction limited to a given geographical location constituted an enforceable exception to the previous absolute rule. Nearly a hundred years later, with the turn of 1711 with mitchel v Reynolds,[5] the exception became the rule that created the modern framework for analyzing the applicability of non-competition rules.

[6] Even if employees sign competition bans, be aware that they are not always easy to enforce. Employees often challenge the agreement in court, and some state laws impede compliance with non-compete rules. Pay attention to your laws and public order and take into account other protective measures, such as. B an agreement on the transfer of proprietary information and inventions (PIIA) when you create non-compete agreements. Where the parties have concluded a non-competition and compensation agreement, the employer has the right to ask the worker to comply with the non-competition rules when drawing up the employment contract, unless there is another agreement and the People`s Court upholds this claim. The worker has the right to claim the agreed compensation from the employer after fulfilling the obligations of remuneration of the competition, and the People`s Court supports this claim. . . .

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