Non-Compete Agreement

Glossary

Compliance

Non-Compete Agreement

A non-compete agreement is an agreement (or it can be a clause in a contract) that sets out limits to or restricts competition between contracted parties. The non-compete can extend to any and all areas where potential conflict or injury might arise. Exclusive supply or distribution agreements will by definition include non-competes. They might also cover, for example, an external contractor’s ability to work for companies that compete with the contractor’s client during the lifetime of the contract and for a set time after it has expired. It might prevent a business owner who is selling a business from establishing a directly competitive business for a set time after the sale has been consummated. While non-competes are fairly standard in the business world, they are not always enforceable if they are deemed to constitute a trade restraint or violate competition law.

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