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RGMacEsq
RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11933
Experience:  Licensed Texas General Practice Attorney
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Governing Law: State of Arizona. If my company (LLC) has

Resolved Question:

Governing Law: State of Arizona.

If my company (LLC) has entered a license agreement that includes a non-compete covenant, am I personally restricted by the covenant as well?
Submitted: 1 year ago.
Category: Business Law
Expert:  RGMacEsq replied 1 year ago.

RGMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

Customer:

Hello

RGMacEsq :

Only if you personally have an agreement with the LLC that would extend to you. Otherwise, the LLC cannot personally bind you to a noncompete with a 3rd party. There would be a lack of "privity" in that contract (meaning that you did not actually have a contract with that 3rd party).

RGMacEsq :

Hello

RGMacEsq :

Now it's possible that the company had a clause that said that the company would prevent all the employees from competing, etc... but even that would not bind you.

RGMacEsq :

The company could be in breach if you were to compete, but you would not.

Customer:

what if the definition of our "party"

Customer:

i'll copy paste 1 sec

Customer:

"Licensee" shall mean individually, or collectively, COMPANY NAME, llc, its agents, employees, directors and officers, owners, affiliated companies, solely in their respective capacities as such.

RGMacEsq :

Understood. Again, this is the LLC's agreement with the third party. If you as an employee compete, the LLC could be sued for breaching the contract, but so long as you don't have a contract with the LLC that you won't compete with this company (or any contract that could so be construed) then you could.

RGMacEsq :

If you were taken to court, they wouldn't be able to show any contract with your name and signature on it to show that you breached a contract (which they would need to do, because non-competes are contractual).

Customer:

Even if I am a partial owner of the LLC?

Customer:

and I signed the license as a representative of the LLC

RGMacEsq :

Yes (unless you signed on behalf of the LLC AND personally). Now it might be a bit more difficult, in that the 3rd party could allege that you were acting in bad faith, and try to pierce the corporate veil, but they should have gotten a personal guarantee (meaning that they should have had you sign and obligate yourself personally to this promise)

Customer:

Oh okay I see.

RGMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

Customer:

I have 1 more question

RGMacEsq :

Okay.

Customer:

I want to type the non compete covenant, and if you could tell me if this would even hold up in court

Customer:

eesh its longs so I'll cliff ntoes it to you

Customer:

it convoludes itself stating if:

RGMacEsq :

A review of a non-compete is outside of the scope of the original question (LLC vs personal liability) and as such would need to be asked in a separate question. We can only answer follow up questions in the same scope as the original.

RGMacEsq :

(per JustAnswer terms of service)

Customer:

In the event a court finds Limit A unreasonable, the PArties agree that the Restrictions shall be enforceable for a peiod.

Customer:

ok

Customer:

nevermind then

Customer:

just quick follow up

Customer:

I am not liable

Customer:

because I am not personally guaranteeing the license

Customer:

just the company is pursuable under the non compete

RGMacEsq :

Again, so long as you signed only as a representative of the LLC, and not personally, it would be very difficult for the other party to impute liability on you personally.

RGMacEsq :

Yes.

Customer:

ok

Customer:

Thank you!

RGMacEsq :

My pleasure.If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX good luck to you!

RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11933
Experience: Licensed Texas General Practice Attorney
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