Non-Compete Clause - can I break it?
johnm...@yahoo.com
part of the sale, I had to sign a non-compete clause in the sales
agreement that set a 2 year term in which I could not be employed by
or own an electrical business in my home state. The purchaser paid me
$75,000 down and then the remainder in monthly installments amortized
over 3 years with a fair APR attached. The monthly payment is due in
my hand by the 3rd day of the month - no later. For the past 3 months
the payment has not been received until the 15th day of the month, and
in addition, last month I never got a payment at all.
Would these late payments past the grace period and a missing payment
be considered a default on the purchaser's part of the agreement and
could I somehow use that to break the non-compete? I would really like
to get back into this field with my own company.
David Martel
This sounds like a breach to me. Head to a lawyer. The one who drew up
this contract might be a good choice. I suspect that you can begin working
in the industry immediately while you sue to recover your old business, if
that's what you desire.You may wish to take a look at your old business
before you do this. Speak to a few of the employees. Maintenance of the
infrastructure may have lagged during the economic downturn.Or you may try
to form a new business.
If you are asking to keep the breached contract in force but just set
aside the non-compete clause I'd suggest speaking with the owner of the old
business. He may be willing to re-negotiate the contract since money may be
tight for his company.
Good luck,
Dave M.
Barry Gold
[OP sold his business to a competitor and signed a 2 year non-
compete clause. The sale was on a 3 year installment plan, and
the buyer has been late with payments and has completely missed
one payment.]
>Would these late payments past the grace period and a missing payment
>be considered a default on the purchaser's part of the agreement and
>could I somehow use that to break the non-compete? I would really like
>to get back into this field with my own company.
This is for discussion purposes only, and is not legal advice. I'm
not a lawyer. If you want legal advice, hire a lawyer.
I can understand your desires, but this is not an area where I would
just jump in. You could end up with an injunction against you *and*
having to pay damages. Depending on how the contract is written, you
could also have to pay his lawyers fees.
What I would do:
1. Notify the competitor/buyer *in writing* that he is late and has
missed a payment. Tell him that he is in default, and give him 10
days to get current.
2. You may be entitled to additional interest for the time that he
has been late. Compute the daily interest -- the safest thing to
do is figure 1/365 times the annual percentage rate. You would be
entitled to deduct this amount from the amount that goes toward the
principle, which means he will need to come up with more money
later. Again, notify him in writing that you are doing so, and ask
him to pay you extra to compensate you for the late payments.
3. Reread your sales contract. This kind of problem is the reason
why you should always have a lawyer involved in drafting a contract
this complex.
4. See a lawyer and find out what you can do, then follow your
lawyer's advice.
Some questions to ask yourself as you reread the sales contract:
a) Who drafted it? If you wrote it, you are stuck with it as
is. If he (or his lawyer) wrote it and you can find any
abiguity, then that ambiguity would be interpreted in your
favor.
b) What does the contract say about late payments? Does it
have a clause saying "time is of the essence"? Does it
provide for late fees or other compensation if he misses a
payment?
c) Does the contract say that any breach allows you to annul
the whole contract? If not, then you probably cannot go back
into business in competition with him.
A late or missed payment is a breach of contract, but the general rule
is that if you can be "made whole" by money damages. This is one such
case: the appropriate compensation is extra interest for the late
payments.
You should compute the extra interest and ask him to pay it, with a
deadline (perhaps 10 or 15 days from when you expect him to receive
your letter).
Note: It is fairly common to compute interest on installment payments
as 1/30 of month's interest (that is, 1/360 of the yearly rate), but
if the contract does not specify it would probably be safer to use
1/365 of the yearly rate.
Bottom line: If notifying him of his late payments and demanding extra
interest does not get him to pay up (with the extra interest), see a
lawyer. *Sometimes* a repeated breach of this sort, which is not
cured after you notify him, will allow you to annul (cancel) the
contract. But you won't know until you ask a lawyer with the actual
contract in hand.
If you don't already have a personal or business attorney, ask your
friends, relatives, and co-workers to ask their attorney for a
recommendation. If several come back with the same name, call that
one first.
If all else fails, ask your county Bar Association for their referral
list, or look in the yellow pages. But a referral from somebody you
trust is better than relying on a YP ad, and the Bar Association just
lists every lawyer who _says_ he/she works in that speciality. Do
*not* hire a lawyer based on an ad you saw in TV, the newspaper, a
bus bench, or the Internet.
Call up and ask for an appointment. Ask how much he will charge
for the initial consulation.
--
Barry Gold, webmaster:
Alarums & Excursions, Xenofilkia: http://places.to/xeno
Conchord: http://www.conchord.org
Los Angeles Science Fantasy Society, Inc.: http://www.lasfsinc.org
Stuart A. Bronstein
> I sold my electrical contractor business to a competitor last
> year. As part of the sale, I had to sign a non-compete clause in
> the sales agreement that set a 2 year term in which I could not
> be employed by or own an electrical business in my home state.
> The purchaser paid me $75,000 down and then the remainder in
> monthly installments amortized over 3 years with a fair APR
> attached. The monthly payment is due in my hand by the 3rd day
> of the month - no later. For the past 3 months the payment has
> not been received until the 15th day of the month, and in
> addition, last month I never got a payment at all.
You didn't ask the question, but there is a possibility the non-
compete clause may not be enforceable in any case, since it may be
considered too broad, or may otherwise violate local law. Talk to
a local business lawyer.
> Would these late payments past the grace period and a missing
> payment be considered a default on the purchaser's part of the
> agreement and could I somehow use that to break the non-compete?
> I would really like to get back into this field with my own
> company.
The failure to make payments on time doesn't in itself allow you to
act in violation of your contractual obligations. If the breaches
are serious enough you might have the right to rescind. In that
case you would be able to take the company back and give back the
money you have received.
c
wrote:
it would depend first on the agreement you have in place -- is 1
missed payment a material breach?
if the agreement isn't clear enough ... same question, just harder to
prove your side
you want my gut answer? have a lawyer draft a notice letter, let them
miss another payment, then send a termination
won't it take you 30 days to get a new company up and running anyway?
-c
NOTE: I AM NOT A LAWYER, I AM A LAW STUDENT (THE EXACT OPPOSITE
THING!)
IF YOU TREAT MY WORDS AS LEGAL COUNSEL, YOU ARE A FOOL
grendal
wrote:
[OP sold his electrical contracting business, signed a non compete w 2
yr term that was state wide. Other party late on payments, failed to
make the last month payment.]
John, you want to go back to work?...
Ok, you have a couple of options.
1) You didn't say what state you were in. If you live in a right to
work state, you can probably ignore the non compete since you do have
the right to work.
2) Your non compete is state wide. That could be considered overly
burdensome and if you got sued, you could/should probably win. (IANAL
and I suggest avoiding lawsuits if at all possible.)
3) The guy who bought your business missed the last month's payment.
Being late isn't good, but its not enough for him to be in breech of
the contract.
If he stopped making payments, you could *sue* him for being in
breech. If you win, you can go back to work without any fear of
reprisals. Actually you should talk to a lawyer because you may have
to send a demand for payment and then as the note holder you have
rights.
Since the guy owes you money, I'd get a good lawyer, spend the first
hour looking at your *legal* options. Then decide what you want to do.
Bottom line, I think you're pretty safe, especially if you don't go
back and solicit clients who were part of the business you just sold.
But TALK TO A LAWYER IN YOUR STATE FIRST!
-G
Stuart A. Bronstein
> 1) You didn't say what state you were in. If you live in a right
> to work state, you can probably ignore the non compete since you
> do have the right to work.
Sorry, no. Right to work laws refer to an employee's right to work
for their employer without having to join a union. It is not a
generalized right to work.
Different states enforce non-competes to different degrees. There
are some states (California is one) refuse to enforce most non-
competes. But that's as far as it goes.
Seth
Stuart A. Bronstein <spam...@lexregia.com> wrote:
>"johnm...@yahoo.com" <johnm...@yahoo.com> wrote:
>
>> I sold my electrical contractor business to a competitor last
>> year. As part of the sale, I had to sign a non-compete clause
>You didn't ask the question, but there is a possibility the non-
>compete clause may not be enforceable in any case, since it may be
>considered too broad, or may otherwise violate local law. Talk to
>a local business lawyer.
I think that's unlikely, since it was part of his sale of a business,
but it's possible.
Seth
Seth
johnm...@yahoo.com <johnm...@yahoo.com> wrote:
>I sold my electrical contractor business to a competitor last year. As
>part of the sale, I had to sign a non-compete clause in the sales
>agreement that set a 2 year term in which I could not be employed by
>or own an electrical business in my home state. The purchaser paid me
>$75,000 down and then the remainder in monthly installments amortized
>over 3 years with a fair APR attached.
>Would these late payments past the grace period and a missing payment
>be considered a default on the purchaser's part of the agreement and
>could I somehow use that to break the non-compete?
The attorney who drafted the sales agreement for you should have
foreseen that possibility and included specific language to cover it.
What does that agreement say?
(Paying over 3 years for a 2-year non-compete seems like something you
shouldn't accept; what incentive does he have to make the final 12
payments? Personally, I'd want the payments to end at least 6 months
_before_ the non-compete expires.)
Seth
Stuart A. Bronstein
He said the non-compete applied to the whole state. These agreements
have to be reasonable both as to duration and area. Depending on how
large the state is, if it applies beyond the geographical area he
actually does business it may well be considered unreasonable and as
a result unenforceable.
grendal
> In article <Xns9C7443219FBAAspamtraplexregia...@130.133.1.4>,
> Stuart A. Bronstein <spamt...@lexregia.com> wrote:
>
> >"johnmoli...@yahoo.com" <johnmoli...@yahoo.com> wrote:
>
> >> I sold my electrical contractor business to a competitor last
> >> year. As part of the sale, I had to sign a non-compete clause
> >You didn't ask the question, but there is a possibility the non-
> >compete clause may not be enforceable in any case, since it may be
> >considered too broad, or may otherwise violate local law. �Talk to
> >a local business lawyer.
>
> I think that's unlikely, since it was part of his sale of a business,
> but it's possible.
>
> Seth
Seth,
First, lets look at the OP's options.
1) Is the non-compete enforceable?
Most likely not. Both the duration (2 years) and the exclusion
territory (Entire State) are too large and too long for this to be
enforceable. Note too that the non-compete exlcudes not only opening
up a competing business, but also working for someone else. Depending
on the State, this too would invalidate the non-compete.
NOTE: Either the OP has to sue the guy who bought his business, or the
guy who bought his business has to sue him. Then the issue is before a
judge to be decided one way or the other.
2) OP states that the guy is late on payments, but completely missed
the last one entirely. This too may depend on the location but we're
talking about a note. The OP can send a demand letter for the missing
payment and give the guy time to respond. Either saying he can't pay,
or he sends a payment. If the other guy doesn't pay, then the OP can
sue the guy for breech and then this issue gets resolved.
3) The OP can decide that he'll risk getting sued by the other guy if
he goes to work for a competitor. If he doesn't solicit business from
former customers, even if the other guy finds out, he'll probably not
sue. The other guy would be hard pressed to show damages and the OP
has a right to practice his trade. In this suit he could get the judge
to rule that the non-compete is unenforceable.
4) The OP can start a company and solicit business. (NOT A GOOD IDEA,
but its an option.) If he gets sued, then he'll be in some potential
hot water.
5) The OP can move out of the exclusion zone and start a new business.
This may be an option, especially if he wanted to move somewhere else
and this avoids any chance of potential litigation. Oh and if the
other guy doesn't pay, he can still sue him for breech.
Now since we don't know where the OP lives, it could be that he lives
close to a state line. Using Chicago as an example, he could start a
corporation in northern Indiana and then register the corporation as a
'foreign' corporation in IL, assuming that he's licensed in IN as well
as IL. Since his business is in IN, he could still do work in IL.
However, he runs the risk of still being sued.
IMHO the best option is to have the OP talk to a lawyer and indicate
his preference that he wants to go back to work as an electrician. My
bet is that the lawyer will tell him that he should sue the guy for
breech, and then take a job as an electrician as an employee. The man
has to eat and the other guy stopped payments so he had no option.
To your point, it doesn't matter if he sold the company or not. The OP
is a licensed and trained tradesman and has a right to earn money in
his trade.
Bob
<spam...@lexregia.com> wrote:
I think Seth's point is that at least in some states non-compete
agreements in connection with the sale of a business are treated
differently from non-competes imposed on an employee. For example, in
New Jersey, "covenants ancillary to the sale of a business are
accorded far more latitude." Coskey's Television & Radio Sales and
Service, Inc. v. Foti, 253 N.J. Super. 626, 633 (App. Div.1992). In
California, although non-compete agreements are generally
unenforceable (B&P Code sec. 16600), the sale of a business is an
exception to the rule (id. sec. 16601). No doubt other states have
similar formulations.
Stuart A. Bronstein
> To your point, it doesn't matter if he sold the company or not.
> The OP is a licensed and trained tradesman and has a right to
> earn money in his trade.
Seth may be thinking about a rule like California has. It says that
non-competes are unenforceable unless given in exchange for good will
on the sale of an interest in the company.
Roy
> ...
>
> He said the non-compete applied to the whole state. These agreements
> have to be reasonable both as to duration and area. Depending on how
> large the state is, if it applies beyond the geographical area he
> actually does business it may well be considered unreasonable and as
> a result unenforceable.
>
I found this. Makes interesting reading. It explains the California
non-compete law and the exceptions to it. The OP didn't specify a state
so I don't know if it directly on point
http://www.andersenalumni.net/%5CCalifornia%20Non-Compete%20Agreements.pdf
Seth
grendal <im_g...@hotmail.com> wrote:
>On Aug 28, 11:15�am, se...@panix.com (Seth) wrote:
>> In article <Xns9C7443219FBAAspamtraplexregia...@130.133.1.4>,
>> Stuart A. Bronstein <spamt...@lexregia.com> wrote:
>> >"johnmoli...@yahoo.com" <johnmoli...@yahoo.com> wrote:
>>
>> >> I sold my electrical contractor business to a competitor last
>> >> year. As part of the sale, I had to sign a non-compete clause
[How enforceable is the non-compete?]
>First, lets look at the OP's options.
>
>1) Is the non-compete enforceable?
>Most likely not. Both the duration (2 years) and the exclusion
>territory (Entire State) are too large and too long for this to be
>enforceable.
Some states are pretty small, OP *sold his business* (key issue;
without that, e.g. in California, _no_ non-competes would be
enforceable), and payment extends through (and past) the non-compete
period. I don't know which state it was, or what their laws say.
>4) The OP can start a company and solicit business. (NOT A GOOD IDEA,
>but its an option.) If he gets sued, then he'll be in some potential
>hot water.
Only if the non-compete is valid.
>IMHO the best option is to have the OP talk to a lawyer and indicate
>his preference that he wants to go back to work as an electrician.
I agree.
> My bet is that the lawyer will tell him that he should sue the guy
>for breech, and then take a job as an electrician as an employee. The
>man has to eat and the other guy stopped payments so he had no
>option.
I don't know his financial condition; he may have enough money to
start a competing company (and have planned to do so after the 2 years
were up).
>To your point, it doesn't matter if he sold the company or not.
In some states, that's a critical fact in determining enforceability
of non-compete agreements.
> The OP is a licensed and trained tradesman and has a right to earn
>money in his trade.
But maybe not in competition with the buyer of his business.
Seth
Robert Bonomi
grendal <im_g...@hotmail.com> wrote:
>On Aug 26, 5:07�pm, "johnmoli...@yahoo.com" <johnmoli...@yahoo.com>
>wrote:
>[OP sold his electrical contracting business, signed a non compete w 2
>yr term that was state wide. Other party late on payments, failed to
>make the last month payment.]
>
>
>1) You didn't say what state you were in. If you live in a right to
>work state, you can probably ignore the non compete since you do have
>the right to work.
Bzzzt! 'Right to work' has _nothing_ to do with a non-compete clause, or the
enforceability thereof.
>2) Your non compete is state wide. That could be considered overly
>burdensome and if you got sued, you could/should probably win. (IANAL
>and I suggest avoiding lawsuits if at all possible.)
Assumes facts not in evidence. If his prior business had an active state-wide
customer base, the geographic restriction *IS* reasonable.
>
>3) The guy who bought your business missed the last month's payment.
>Being late isn't good, but its not enough for him to be in breech of
>the contract.
"breech" -- that's "the rear part of the body, the buttocks", isn't it?
A rather strange place for a contract. *GRIN*
"breach" is the word you meant -- "an infraction or violation, as of a law,
trust, faith, or promise".
Tim Smith
> are some states (California is one) refuse to enforce most non-
> competes. But that's as far as it goes.
The key word here is "most". It sounds like the OPs non-compete would
fall outside that, even in California. From what I understand, when you
sell a business, California does consider non-compete agreements valid.
--
--Tim Smith
Stuart A. Bronstein
>> Different states enforce non-competes to different degrees.
>> There are some states (California is one) refuse to enforce
>> most non- competes. But that's as far as it goes.
>
> The key word here is "most". It sounds like the OPs non-compete
> would fall outside that, even in California. From what I
> understand, when you sell a business, California does consider
> non-compete agreements valid.
Exactly so. However the non-compete still must be considered
reasonable as to both duration and area. Determining that would be a
very fact specific exercise, and we don't have sufficient information
even to make an educated guess in this case.
Barry Gold
I'm inclined to agree. When you sell a business, including the
goodwill, a "reasonable" non-compete agreement is enforceable.
What is "reasonable"? That's up to the courts to decide. A statewide
non-compete would almost certainly be "unreasonable", unless the
busienss he sold did _substantial_ business throughout the state
(i.e., had branch offices in nearly every city, including the small
cities in the rural counties like Stanislaw in the northeast of the
state).
Also, the length of time must be reasonable. Three years might be
excessive, or might not.
What I'm unsure of, is whether OP can seek employment in, e.g., a
unionized electrical business where he is just doing work but not
soliciting/selling the business. My guess is that he could do that,
but I would definitely consult a lawyer specializing in this area
(non-compete agreements) before trying it.
And as I mentioned, OP can go to court and sue to enforce the
contract, requiring the buyer to become current on payments. If buyer
still fails to pay, I suspect a good lawyer could go back to court and
argue that the breach is so substantial that OP is entitled to cancel
the rest of the agreement.
grendal
> > The OP is a licensed and trained tradesman and has a right to earn
> >money in his trade.
>
> But maybe not in competition with the buyer of his business.
>
> Seth
I snipped the rest because there's a couple of things about the
agreement as stated.
Since we don't know where the OP lives, or have a copy of the contract
we don't know what was written.
There are two issues, the breech of contract/failing to pay on the
note, and the non-disclosure.
I think you're mistaken on the Californian law.
The issue in California, any non-compete agreement as employees are
unenforceable, however the exception is that non-compete agreements
with respect to partnerships and businesses may be enforceable.
The key thing is the word 'may'.
So you have to look at what would make this non-compete unenforceable.
* Duration.
* Exclusion Territory
* Terms of Infringement.
The issue is that the non-compete barred the OP from not only opening
a competing business, but also from working in his trade as an
employee for a business.
That's too restrictive.
IANAL but no judge will let that fly.
So that's why I'm saying that if the OP just took a job as an employee
and didn't solicit former customers, if he gets sued, the other guy
would be hard pressed in showing damages, and the OP does have a right
to work.
This is different than if the OP opened a competing business.
I think a good example of the non-compete that would be enforcable in
California would be if you owned a pizza joint, and sold the business.
There was a non-compete for 1 year and an exclusion zone of 15 miles
(suburbs).
If after 3 months you decided that you wanted to get back in to the
pizza biz, and you opened up a new pizza joint just down the street,
you'd be sued.
If you decided to open up a pizza joint in the town next door that was
18 miles away, things would be different.
With respect to the OP, he would be walking a dangerous line if he
just decided to open a new business without first talking to a lawyer
and didn't start legal action regarding the lack of payment on the
note.
Seth
grendal <im_g...@hotmail.com> wrote:
>I think a good example of the non-compete that would be enforcable in
>California would be if you owned a pizza joint, and sold the business.
>There was a non-compete for 1 year and an exclusion zone of 15 miles
>(suburbs).
>
>If after 3 months you decided that you wanted to get back in to the
>pizza biz, and you opened up a new pizza joint just down the street,
>you'd be sued.
>
>If you decided to open up a pizza joint in the town next door that was
>18 miles away, things would be different.
What if you just took a job at a pizza joint two blocks away from the
one you sold?
What if the owner started advertising that *you* were the chef
(because your reputation was valuable in gaining customers)?
Seth
grendal
> What if you just took a job at a pizza joint two blocks away from the
> one you sold?
>
> What if the owner started advertising that *you* were the chef
> (because your reputation was valuable in gaining customers)?
>
> Seth
Ok, now you're changing the argument.
In your first question... You have a right to work to make a living.
In terms of a non-compete where you sell a business, then you're
signing away your rights to own a similar business within a specified
exclusion zone for a specific time period. If either of those two
constraints are overly burdensome then it could be that the non-
disclosure agreement could be considered unenforceable. But working as
an employee with no equity stake? C'mon.
In your second argument. It depends. In California, if you have no
equity position in the business, you have a right to ply your trade.
So if I'm the chef, I sell you my restaurant and then a couple of
months later I get the itch to cook and take a job down the block... I
have a right to work as an employee. This isn't really a good example
since most good chefs are compensated in part with an equity stake.
Note... when we say chef we're talking about the head chef and not a
sous chef or line cook. I think that in most other states this would
hold true too. Because I have a couple of friends who are chefs and
some are restaurant owners, I do know of stories where chefs are hired
away all the time, or leave to start their own restaurants.
Restaurants are not a good example because there are a lot of
variables in to what makes a good restaurant and what will cause a
restaurant to fail. I guess if you went to work down the street, took
the recipes and started making the same pizzas... That might bring on
a different lawsuit.
The difference is that we're talking about the sale of a company vs
the right to work.
But getting back to the electrician...
In his case, he stated that he had a 3 year note on the remainder of
the business and his non-compete was for 2 years and was state wide.
That length of time is a tad long and the entire state is a bit to
large a territory.
In any case, the OP would need to talk to an attorney to know what his
options are. Just because the clause isn't enforceable doesn't mean
that he doesn't risk getting sued.
Seth
grendal <im_g...@hotmail.com> wrote:
>On Sep 2, 12:21�am, se...@panix.com (Seth) wrote:
>
>> What if you just took a job at a pizza joint two blocks away from the
>> one you sold?
>>
>> What if the owner started advertising that *you* were the chef
>> (because your reputation was valuable in gaining customers)?
>Ok, now you're changing the argument.
I don't think so; just clarifying.
>In your first question... You have a right to work to make a living.
Is that necessarily true? (For instance, if the non-compete includes
payments of, say, $100,000/year, do I necessarily have that right
since I wouldn't need to work?)
>In terms of a non-compete where you sell a business, then you're
>signing away your rights to own a similar business within a specified
>exclusion zone for a specific time period.
If that's what the non-compete contract says. There's no reason a
contract couldn't be stronger, such as specifying that I may not do
anything that competes with the buyer. (I don't know how strong a
contract would be upheld, which is a factual and by-state issue.)
> If either of those two constraints are overly burdensome then it
>could be that the non- disclosure agreement could be considered
>unenforceable.
ITYM non-compete. Non-disclosure is permissible.
> But working as an employee with no equity stake? C'mon.
Why not? Especially in a personal services business, where the
identity of the service provider is the key issue. For instance, I've
seen lots of signs at hair salons saying things like "Joe (formerly of
Mike's Salon) now works here". If Joe had a non-compete with Mike's
Salon, why does it matter whether he's an employee or contractor (in
the latter case, he's the business owner of a sole proprietorship)?
>In your second argument. It depends. In California, if you have no
>equity position in the business, you have a right to ply your trade.
>So if I'm the chef, I sell you my restaurant and then a couple of
>months later I get the itch to cook and take a job down the block... I
>have a right to work as an employee. This isn't really a good example
>since most good chefs are compensated in part with an equity stake.
But if you aren't allowed to have one, I'm sure you could work out a
contract that involves profit sharing (in cash) and no "equity stake".
>Note... when we say chef we're talking about the head chef and not a
>sous chef or line cook. I think that in most other states this would
>hold true too. Because I have a couple of friends who are chefs and
>some are restaurant owners, I do know of stories where chefs are hired
>away all the time, or leave to start their own restaurants.
How common are non-compete agreements in that industry? I work in
finance, and I've signed lots of employee agreements that provide for
confidentiality, not working for any competing firm while I'm working
for this one, not working for anyone else during market hours, not
working for anyone else without permission, the company owns any
relevant ideas I have during the time I'm employed, etc.; but none of
them limited who I could work for or what I could do after I was no
longer employed at that particular company (other than the usual
confidentiality and "I'll assist the company in getting patents and
copyrights on stuff I did for them, at their expense").
>Restaurants are not a good example because there are a lot of
>variables in to what makes a good restaurant and what will cause a
>restaurant to fail. I guess if you went to work down the street, took
>the recipes and started making the same pizzas... That might bring on
>a different lawsuit.
Only if the recipe was a trade secret of the first company.
>But getting back to the electrician...
>
>In his case, he stated that he had a 3 year note on the remainder of
>the business and his non-compete was for 2 years and was state wide.
>That length of time is a tad long and the entire state is a bit to
>large a territory.
The time may be long, and "entire state" varies tremendously in size.
>In any case, the OP would need to talk to an attorney to know what his
>options are.
Agreed.
> Just because the clause isn't enforceable doesn't mean that he
>doesn't risk getting sued.
That's _always_ a risk. Anybody can sue anybody for anything.
Seth
Stuart A. Bronstein
> grendal <im_g...@hotmail.com> wrote:
>>On Sep 2, 12:21�am, se...@panix.com (Seth) wrote:
>>
>>> What if you just took a job at a pizza joint two blocks away
>>> from the one you sold?
>>>
>>> What if the owner started advertising that *you* were the chef
>>> (because your reputation was valuable in gaining customers)?
>
>>living.
>
> Is that necessarily true? (For instance, if the non-compete
> includes payments of, say, $100,000/year, do I necessarily have
> that right since I wouldn't need to work?)
This is one area of the law that is very dependent on the laws of
your state. In my experience the laws vary quite a bit (on
technical grounds - it might not seem like great variations to non-
lawyers).
One thing that they all seem to have in common, though, is that the
non-compete must be "reasonable" as to both time and distance.
What is reasonable is also likely to vary state to state.
>> If either of those two constraints are overly burdensome then
>> it could be that the non- disclosure agreement could be
>> considered unenforceable.
>
> ITYM non-compete. Non-disclosure is permissible.
That does bring up an interesting point, though. In California
non-competes are generally not enforceable, but non-disclosure
agreements are. I've seen employers here call their agreement a
non-compete when it's really for non-disclosure.
> How common are non-compete agreements in that industry? I work
> in finance, and I've signed lots of employee agreements that
> provide for confidentiality, not working for any competing firm
> while I'm working for this one, not working for anyone else
> during market hours, not working for anyone else without
> permission, the company owns any relevant ideas I have during
> the time I'm employed, etc.; but none of them limited who I
> could work for or what I could do after I was no longer employed
> at that particular company (other than the usual confidentiality
> and "I'll assist the company in getting patents and copyrights
> on stuff I did for them, at their expense").
You may be in one of those states that doesn't allow non-competes
(post job termination, of course).
Mike
> In his case, he stated that he had a 3 year note on the remainder of
> the business and his non-compete was for 2 years and was state wide.
> That length of time is a tad long and the entire state is a bit to
> large a territory.
Rhode Island is "a bit to[sic] large"? (OP never said what state he was
in.) Now a single COUNTY in Alaska might be a "bit too large" (then
again, considering the population, etc. even the whole state might not
be too large if your business is selling air conditioners.) It all
depends on what state we're talking about and what business we're
talking about (but if it's an electrical installation company that wires
houses or such, then yeah, even RI might be somewhat large.)
Doug McCrary
"grendal" <im_g...@hotmail.com> wrote in message
news:06dc3444-d7b9-40c4...@l34g2000vba.googlegroups.com...<snip>
> There are two issues, the breech of contract/failing to pay on the
> note, and the non-disclosure.
> I think you're mistaken on the Californian law.
>
Robert Bonomi
Not in a muzzle-loader. <grin>
Actually, breech is simply the 'rearward part', of more or less anything.
Mike Jacobs
> "grendal" <im_gu...@hotmail.com> wrote in message
>
> <snip>
> > There are two issues, the breech of contract/failing to pay on the
> > note, and the non-disclosure.
> > I think you're mistaken on the Californian law.
>
> And to thiunk I always thought the breech was where the the bullet went...
Mr. McCrary, one who turns MLM into misc.grammar.moderated ought to
watch out for the glass house from which his stones are being hurled.
Or did you "thiunk" about it and put that double definite article in
the preceding sentence, just to see if anybody would catch your
nonstandard syntax and spelling?
<satire mode ON>
No, breech is what happens when somebody brakes a contract. Then,
after that you may get accelerated performance, but only if you have a
hot V-8, and assuming the other side has not shifted gears and made
you change attire for being too slick. Then, if all goes write, you
might be able to keep the car on the rode. Just be sure to cheque
your breaks before you get to that grayed up ahead, and remember to
keep your breaches on and not be in such a hurry to criticize others'
typing.
<satire mode OFF>
8*)
--
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Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
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