|
The field of business law covers a wide variety disputes involving every aspect of the running of a business. One of the most important types of disputes covered under this area of law are covenants not to compete. These contracts, while often crucial to ensuring the success of one party’s business, can be crippling to the other party if not drawn up in a fair manner. What is a Covenant not to Compete? A covenant not to compete is a contract between two parties pledging that one party will not compete against the other. In general, these contracts are intended to limit an employee’s ability to work for a direct competitor or to start a business that would be in direct competition with his current employer. Covenants not to compete are drawn up for the following situations: • Employment Contracts – This is most common when employees are exposed to valuable trade secrets. By requiring employees to sign this agreement as part of their employment contract, a business owner will ensure that his employees will not provide services to direct competitors in the future. • Sale of a Business – Non-compete agreements are often an important component of the sale of a business. In this situation, the agreement is intended to prevent the former owner from starting up a competing business nearby and taking back all of his clients. Enforceability of Non Compete Contracts Covenants not to compete are highly complex documents. The financial well-being of both parties can be severely impacted by the wording of this contract. As a result, it is important to make sure that you have an experienced commercial lawyer review the contract before you agree to all of the terms and sign it. Employers and people purchasing a business will need an attorney to make sure that the agreement will be enforceable in court if the other party decides to dispute the terms. Employees and sellers of businesses will want to safeguard their ability to make a living and will need to have an attorney present to make sure that the agreement doesn’t put their income stream in jeopardy. In order for a covenant not to compete to be enforceable, it must include the following stipulations: • There must be reasonable time limitations placed on the agreement • There must be reasonable geographic limitations placed on the agreement • There must be reasonable “consideration” on both sides of the agreement Without these stipulations, a covenant not to compete may be considered a restraint of trade. This would invalidate the agreement. The courts generally evaluate the merits of each covenant not to compete on an individual basis when determining if it is enforceable. If you need help with a covenant not to compete in the Central Pennsylvania area, please contact the Law Offices of Saidis, Flower, & Lindsay today to schedule a consultation.
Related Articles -
Camp Hill criminal law attorneys, Camp Hill defense attorneys, Camp Hill divorce attorneys, Camp Hill criminal defense lawyers, Camp Hill truck accident l,
| 
