Marketplace | Business

A non-compete agreement prevents one or both of the contracting parties from competing with the other party in certain ways. It can either be inserted as one of the terms of the contract or it can form a stand-alone agreement. This agreement shall include reasonable time limits and territorial restrictions. It must not go beyond what is reasonably necessary to protect legitimate commercial interests otherwise might be unenforceable.

This agreement is made between an employer and an former employee, where the employee promises to not enter into direct competition once the employment period is over. The employee is restricted from either working with a direct competitor or starting a business of their own in the same niche. This is also why independent contractors and consultants are subjected to non-compete agreements. It is important to include time limits in any non-compete clauses. It must not go beyond what is reasonably necessary to protect legitimate commercial interests. If PERs are not reasonable, they are void. Choose the minimum type, area, scope and duration of PERs which is adequate to protect the specific relationships you have identified.

This contract allows parties to pool resources in an undertaking or venture that usually outlines a specific goal or time frame. Companies often partner to start projects that are in their mutual interest. With this agreement, parties do not create a new and distinct legal entity.