Is a non-compete still binding if a business is sold?
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Is a non-compete still binding if a business is sold?
I sold my business in 2006 and signed a 5 year non-compete. That owner sold the business to new owners.The agreement has 8 months left. Right now I cannot work within a 20 mile radius. Can new owners enforce this contract that I signed with original owner who sold them the business?
Asked on March 30, 2011 under Business Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
The question is, who did you sign the agreement with? For example, if you signed it directly with this owner as a person, then unless he specifically assigned the agreement to the new owners, they may not enforce it. However, if the agreement was signed with the business entity (e.g. a corporation or an LLC) and that business entity was sold, then the new owners of the entity may enforce its agreement with you--that party with you whom you agreed is still in existence and business.
Sometimes noncompetes are struck down if they are too broad--last for too long, cover an unreasonably wide area for that type of job and industry, or block too many types of employment. You may wish to have the agreement examined and reviewed by an employment attorney, to see if it is overbroad.
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