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Hi all, 20 years ago I signed a no compete contract stating that I would
not attempt to take business away from my employer if I should leave. Since
then the company has been sold to another company and I have left the
company. Is my contract binding with the second company?
Thanks in advance,
Tim
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"SCOTT" <tkscott@vol.com> wrote:
Hi all, 20 years ago I signed a no compete contract stating
that I would not attempt to take business away from my employer
if I should leave. Since then the company has been sold to
another company and I have left the company. Is my contract
binding with the second company?
In part it depends on exactly what it says and what state you were
in when you signed it.
Assuming it's valid, the general rule is that a covenant not to
compete must be reasonably limited in both area and time. I think
it's very unlikely that enforcing such an agreement for 20 years
would be considered reasonable, so you're probably ok.
If you still have the contract, take it to a local lawyer just to
be sure.
Stu
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On Mon, 18 Jul 2005 14:41:01 -0400, "SCOTT" <tkscott@vol.com> wrote:
Hi all, 20 years ago I signed a no compete contract stating that I would
not attempt to take business away from my employer if I should leave. Since
then the company has been sold to another company and I have left the
company. Is my contract binding with the second company?
To give a definitive answer we would need to know exactly what you
agreed to, and any other facts necessary to determine what state's law
applies to the agreement. In general, though, the law disfavors
lengthy noncompete agreements because they are considered to unduly
limit an employee's freedom to earn his living in any legal manner.
An agreement which did not specify a time limit would almost certainly
be construed to imply a "reasonable time" much shorter than 20 years.
An agreement which expressly specified that long a time would be found
invalid and unenforceable, at least to that extent, in most states,
under most conditions.
My email address is LLM041103 at earthlink dot net.
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SCOTT <tkscott@vol.com> wrote:
Hi all, 20 years ago I signed a no compete contract stating that I
would not attempt to take business away from my employer if I should
leave. Since then the company has been sold to another company and
I have left the company. Is my contract binding with the second
company?
I have signed numerous non-compete/non-disclosure agreements with
contractors and with clients. My understanding from my business law
courses and from my legal research (confirmed by attornies) leads me
to the following conclusions:
1. Your contract was an asset of your original employer and is now
an asset of the successor employer.
2. If the contract was enforceable by the original employer, it is
enforceable by the successor employer.
3. The contract never was enforceable to prvent you from becoming
an employee of an industry competitor unless you had access to
"real" trade secrets.
4. The contract is "probably" not enforceable unless you are
going into business for yourself and are taking on successor
employer's clients with whom you have had substantive contact
in the last year.
5. Courts don't like non-competition agreements.
6. Never sign your name to anything you might later regret.
The only legal advice I offer you is "see an attorney."
Dick - I never was an attorney
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SCOTT wrote:
Hi all, 20 years ago I signed a no compete contract stating that I would
not attempt to take business away from my employer if I should leave. Since
then the company has been sold to another company and I have left the
company. Is my contract binding with the second company?
Nobody can say without reviewing the actual contract. However, in a
general sense, yes, the contract is binding because the purchasing
company 'inherits' all the obligations of the company it bought.
Obligations go both ways.
If the company does not pursue the same business, and probably won't
pursue it again, then you may be let out of your contract. All such
non-competes I've ever seen have expiration dates. You may be able to
get out of such a contract as being unconscionable if it lacks such a date.
I have never heard of a non-compete which goes on forever.
-paul
ianal
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rdadams@smart.net (Dick Adams) wrote:
I have signed numerous non-compete/non-disclosure agreements
with contractors and with clients. My understanding from my
business law courses and from my legal research (confirmed by
attornies) leads me to the following conclusions:
1. Your contract was an asset of your original employer and is
now an asset of the successor employer.
Right.
2. If the contract was enforceable by the original employer, it
is enforceable by the successor employer.
Right.
3. The contract never was enforceable to prvent you from
becoming an employee of an industry competitor unless you had
access to "real" trade secrets.
Depends on state law, which vary widely, or at least did the last
time I looked into the issue outside of California.
5. Courts don't like non-competition agreements.
But they are enforced when required to do so by law.
Stu
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On Mon, 18 Jul 2005 14:41:01 -0400, "SCOTT" <tkscott@vol.com> wrote:
To give a definitive answer we would need to know exactly what you
agreed to, and any other facts necessary to determine what state's law
applies to the agreement. In general, though, the law disfavors
lengthy noncompete agreements because they are considered to unduly
limit an employee's freedom to earn his living in any legal manner.
An agreement which did not specify a time limit would almost certainly
be construed to imply a "reasonable time" much shorter than 20 years.
An agreement which expressly specified that long a time would be found
invalid and unenforceable, at least to that extent, in most states,
under most conditions.
My email address is LLM041103 at earthlink dot net.
I suspect you're misreading part of the original post. I believe the
original poster meant to say that he signed the noncompete 20 years ago but
only recently left the employ of the company (or successor company). So the
question isn't whether a non-compete agreement which triggered 20 years ago
is still enforceable, but rather whether a document signed 20 years ago is
still enforceable if it triggers today.
Ira Smilovitz
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Hi all, 20 years ago I signed a no compete contract stating that I would
not attempt to take business away from my employer if I should leave.
Since
then the company has been sold to another company and I have left the
company. Is my contract binding with the second company?
Here in California, the clause woud only be legally enforceable if you were
selling the business (including good will) and the buyer wanted a noncompete
clause for the local market. Even then, it would need to be for a limited
period of time, maybe 3-5 years.
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"Ira Smilovitz" <iras1@aol.com> wrote:
I suspect you're misreading part of the original post. I believe
the original poster meant to say that he signed the noncompete
20 years ago but only recently left the employ of the company
(or successor company). So the question isn't whether a
non-compete agreement which triggered 20 years ago is still
enforceable, but rather whether a document signed 20 years ago
is still enforceable if it triggers today.
Good point. And assuming it's a valid clause, the answer is probably
yes.
The bottom line, though, is that the exact wording of the agreement
must be analyzed under the laws of the state he works in to determine
if or to what extent it is enforceable.
Stu
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In article <5hjqd191l3hr81hi6lf63erjo7fodd43fk@4ax.com>,
Paul Cassel <pcasselplus2@comcast.net> wrote:
SCOTT wrote:
Nobody can say without reviewing the actual contract. However, in a
general sense, yes, the contract is binding because the purchasing
company 'inherits' all the obligations of the company it bought.
Obligations go both ways.
But was there a "meeting of the minds" that remains? Suppose he
signed the contract with a small company that had a 1% market share,
which was bought ought by a large company with a 90% market share.
Being limited to 99% of the market isn't nearly as much of a hindrance
as being limited to 10% of it is.
Seth
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In article <7na2e1dfc7qkbgf8agi4pi735e8qa3ff60@4ax.com>,
Seth Breidbart <sethb@panix.com> wrote:
In article <5hjqd191l3hr81hi6lf63erjo7fodd43fk@4ax.com>, Paul Cassel <pcasselplus2@comcast.net> wrote: But was there a "meeting of the minds" that remains? Suppose he signed the contract with a small company that had a 1% market share, which was bought ought by a large company with a 90% market share. Being limited to 99% of the market isn't nearly as much of a hindrance as being limited to 10% of it is.
If the company had a 1% market share at the time the non-compete was signed,
but then grew to have a 90% share, does _that_ invalidate the non-compete?"
If there was a "meeting of the minds" at the time the contract was entered
into, it is binding. If one of the participants "changes their mind" _later_,
too bad.
If the signatory company market occupancy grows, either due to 'efficiency' of
the company's operation, _or_ by acquisition of other companies, then those
markets _are_ covered by the non-compete.
Now, in the case of the signatory company being bought by a different company,
the "scope" of the non-compete becomes an 'interesting question'. It becomes
awkward to argue that the pre-existing business of that different company is
now covered by the 'acquired' non-compete. Sorting out which parts of any
market growth _after_ that acquisition are within the 'scope' of that non-
disclosure is also "interesting".
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<Hi all, 20 years ago I signed a no compete contract stating that I
would not attempt to take business away from my employer if I should
leave. Since then the company has been sold to another company and I
have left the company. Is my contract binding with the second company?
The odds that this document is still in your personnel file are not
high. Ask for a copy (many states require that an employer do so) of
your personnel file and hiring/employment paper work. Not only have
many years passed, managers come and gone, but the business ownership
has changed- someone over these years may have decided that your hiring
paperwork is unnecessary. You would be amazed at the number of folks
who recommend that HR become a paperless operation (ill advised IMHO).
If you are still working at the firm waltz in to HR and ask to see your
personnel file. Ask for a copy of your application and any employment
agreements you may have signed. Drum up some lame excuse, such as you
want to use your material to illustrate how the process has changed in
a workshop (or to share with your son/daughter). Play along with any
concern they may have about SSNs, names or corporate IDs - tell them to
line all that out.
If the non-compete is there you have a copy to take to a plaintif's
employment attorney for examination.
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