Crafting Sound Non-Compete Agreements

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Non-compete agreements have several valuable uses. Most often these "covenants not to compete" are found where a business purchases another business, and seeks assurance that the seller won't set up shop right down the street after having just sold all his business assets, customer lists, and goodwill to the buyer. The second main use of non-competes is to limit a former employee from working with a business competitor when doing so would be unfair to their original employer.

In order for a non-compete agreement to be enforceable in North Carolina, they must be (1) in writing; (2) reasonable as to time and territory; (3) protect a legitimate business interest; and (4) be based on valuable consideration.

Non-compete agreements are generally not favored by North Carolina courts and are construed against the drafting party, which is usually the employer, or the purchaser in the case of business sales. However, state courts do uphold non-compete agreements if they meet a reasonableness standard. For example, if the non-compete agreement denies the employee the right to work for any competitor in the state, the agreement will likely not be upheld. Similarly, non-compete agreements that prohibit an employee from working for a competitor for five years are presumed unreasonable and are generally not upheld.

If an employee or competitor is violating a non-compete agreement, or if you believe you have signed a non-compete agreement that is unfair, contact Miller Law Firm in Raleight for a free consultation. We have experience representing businesses and both employees and employers in dealing with non-compete agreements.