A non-compete or non-competition agreement is a contract where an employee agrees not to compete with the employer. The agreement may be for a limited duration and geographic area, and may even identify specific companies that the employee pledges not to join upon the termination of his or her employment.
A non-compete contract (NCC) or covenant not to compete (CNC), is a term used in contract law under which one party, usually an employee, agrees not to enter into or start a similar profession or trade in competition against another party, usually the employer. When you share ideas and business practices with employees, partners, and contractors, a Non-Compete Agreement helps make sure the people you work with don’t wind up becoming or working for the competition.
Non-compete Agreement becomes necessary to protect:
- An employee and employer are terminating relationship and the employer desires that the employee will not compete against the employer in a new setting.
- A company and a consultant or independent contractor are terminating their relationship and the company desires that the consultant will not compete against the company in a new setting.
- Two business parties are terminating a business relationship.
- Information required for creating a Non-Compete Agreement:
Following are the key provisions in a Non-Compete Agreement and these must be incorporated in the agreement:
- The agreement effective date
- Names and addresses of parties to the agreement
- Reason for Non-compete Agreement
- Time period for Non-compete Agreement
- Geographic area for Noncompete Agreement
- How the Noncompeting Party will be compensated
- Individuals who will be signing the agreement
The following are additional or optional terms that you may want to include in your agreement.
- The Noncompeting Party will be prohibited from soliciting Protected Party’s customers or clients. Include the time-period during which this clause will be enforceable.
- The Noncompeting Party will be prohibited from hiring Protected Party’s employees. Include the time-period during which this clause will be enforceable.
- The Noncompeting Party will be prohibited from disclosing the Protected Party’s confidential information. You may choose a time-period during which this clause will be enforceable and/or you may require that records and or property must be returned by the Noncompeting Party to the Protected Party within a specified period of time after being requested to return the items. For example, three weeks.
- Generally, a Noncompete Agreement must be reasonable in its terms and include consideration (money exchanged for the promise not to compete) in order to be enforceable.
- Signing the agreement: In order to make the Noncompete Agreement legally binding, both parties to the agreement will need to sign it.
We deal with the following Agreements
- Consulting Agreement
- Employment Agreement
- Executive Employment Agreement
- Noncompete Agreement
- Non-Disparagement Employment Agreement
- Non-Disclosure Agreement (NDA)
- Independent Contractor Agreement
- Employment Contract
- Employee Handbook