Is a non-compete still binding if a business is sold?

UPDATED: Mar 30, 2011

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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