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Roger
Roger, Attorney
Category: Business Law
Satisfied Customers: 31022
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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My husband and I signed a no compete clause stating we will ...

Customer Question

My husband and I signed a no compete clause stating we will not sell, open another company, or work for another company that handles our product. There is a 150 mile radius and 10 year clause. This document was not notarized and due to some bad situations with the owner, we would like to be able to sell to someone else. Can we get out of this agreement and how much weight does this agreement have if not notarized.
Submitted: 8 years ago.
Category: Business Law
Expert:  Roger replied 8 years ago.

A non-compete clause, or covenant not to compete (CNC), is a term used in contract law under which one party (usually an employee) agrees to not pursue a similar profession or trade in competition against another party (usually the employer). As contract provisions, a CNC is bound by traditional contract requirements, including the consideration doctrine. The use of such clauses is premised on the possibility that upon his or her termination or resignation, the employee might begin working for a competitor or starting a business, and gain competitive advantage by abusing intimate knowledge of the employer's operations to release trade secrets or sensitive information such as customer/client lists, business practices, upcoming products, and marketing plans.

Conversely, a business might abuse a non-compete covenant to prevent an employee from working elsewhere at all. Most jurisdictions in which such contracts have been examined by the courts have deemed them to be legally binding, so long as the clause contains reasonable limitations as to the geographical area and time period in which an employee of a company may not compete. Courts have held that, as a matter of public policy, an individual can not be barred from carrying out a trade in which he has been trained except to the extent that is necessary to protect the employer.

The majority of U.S. States recognize and enforce various forms of non-compete agreements. In converse, few States totally ban or prohibit non-competes to the extent, for example, that California does. For this reason, non-compete agreements have been popular among companies with employees not working in the States where non-competes are banned.

Let me know what state you're in and I'll try to find some specific information for you.

In general, your best chance is to allege that the time period is unreasonable. 10 years is very long. Most non-compete clauses are for 2-5 years.

The fact the document was not notarized unless you are willing to allege you didn't sign it or the signature was obtained by fraud.

Roger and other Business Law Specialists are ready to help you
Customer: replied 8 years ago.
We live in IL. The owner is refusing to give us a copy of the agreement. We never received a copy from the day we signed as promised.

He lowered prices, made very sexual comments to my wife in front of his employees and on numerous occassions refused to onload our product which caused us to lose business for the next day.
Expert:  Roger replied 8 years ago.

Here's what the Illinois Supreme Court has said about non-compete agreements:

Despite the strong presumption against restraints of trade, however, a covenant not to compete in an employment contract is enforceable if it is strictly limited in time and place and if it is otherwise reasonable when one considers the interests of the employer and its effect on the employee. ( Uni-Worth Enterprises, Inc. v. Wilson (1979), 244 Ga. 636, 261 [***7] S.E.2d 572) Conversely, "[a] non-competition covenant which prohibits an employee from working for a competitor in any capacity, that is, a covenant which fails to specify with particularity the activities which the employee is prohibited from performing, is too broad and indefinite to be enforceable." National Teen-Ager Co. v. Scarborough (1985), 254 Ga. 467, 469, 330 S.E.2d 711, 713.

I believe you've got a good chance to cancel the agreement on its time limit. Also, the actions of your employer may give you some ammunition to challenge the agreement under the "otherwise reasonable with regard to the employee's interest." If the employer is acting inappropriately, the court could cancel the agreement on those grounds.

Talk to an attorney about filing a petiiton to cancel the non-compete agreement. I think you've got a good cause of action.