10701 Corporate Dr. Ste 340-104, Stafford, TX 77477

logo
  • Home
  • Contact Us
  • About Us
  • Practice Area Overview
    • Asset Protection
    • Business Law Services
      • Business Formation
      • Business Contracts
      • Documents for Startup Businesses
    • Estate Planning
    • Wills and Trusts
  • Blog
  • Contact Us

Noncompete Agreements—The Basics

July 8, 2021 by Sandra Ighalo

What You Need to Know About Covenants Not to Compete

Noncompete Agreements—The BasicsWhen you put a lot of time and money into a business—developing the product and packaging, building a customer base, and formulating the most effective marketing strategy—you don’t want an employee, vendor, or trusted partner/associate opening a competing enterprise or taking the results of your work to a competitor. A noncompete agreement, or “covenant not to compete,” can prevent that.

A Noncompete Agreement Is a Contract

A covenant not to compete must meet all the requirements of a legally binding contract:

  • There must be offer and acceptance by two or more parties—In some instances, offer and acceptance must be in writing.
  • Each party must give consideration—Both parties must either give something of value or promise to refrain from doing something they have a legal right to do. If you try to add a noncompete clause to an existing employment contract without giving the employee something in return, the provision may not be supported by consideration and may be unenforceable.
  • The contract must be entered voluntarily—You may not use duress, undue influence, or misrepresentation to secure agreement not to compete.
  • All parties must have the legal capacity—Common reasons a party lacks capacity to enter a contract include age (minors have special rules that apply) and mental impairment. Mental impairment can be due to intoxication or mental illness.
  • The subject matter of the contract must be legal—Courts will not enforce an agreement to commit an illegal act.

A Noncompete Agreement Must Be Fair and Reasonable

You generally cannot prevent a person from ever working again in a particular industry, as courts are disinclined to enforce agreements that keep someone from being gainfully employed. Accordingly, a noncompete agreement must be reasonable in terms of:

  • Geographic scope—If your business is primarily local, the courts will typically enforce only agreements that limit the scope of competition to the local area, as competition on the other side of the country won’t affect your business.
  • Time length—While there’s no hard and fast rule, the shorter the term of the agreement, the more likely a court will enforce it. A limitation for a year or two will generally pass muster, but longer agreements become problematic.
  • How the agreement defines “competition”—The noncompete agreements most likely to be upheld specifically list the competitors with whom the employee may not work or state that the employee may not open a new business that directly competes with the employer.

Contact MCIS Law

At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to startup and existing businesses in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.

Filed Under: Noncompete Agreements Tagged With: Agreement Is a Contract

Request A Consultation

  • This field is for validation purposes and should be left unchanged.

Disclaimer

Archives

  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • March 2019
  • February 2019
  • January 2019
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • June 2018

Contact us

MCIS Law,PLLC

Address:

10701 Corporate Dr. Ste 340-104,
Stafford, TX 77477

Phone:

(346) 297-0121

  • Facebook
  • Twitter
  • Linkedin

Request A Consultation

  • Home
  • About Us
  • Practice Area Overview
  • Blog
  • Contact Us
footer-logo

© 2021 MCIS Law, PLLC All Rights Reserved.
Sitemap | Disclaimer