Before examining the reasonableness of a noncompetition agreement, courts first consider whether the agreement is ancillary, meaning connected and subordinate to another valid contract. If there is no such contract, the court will look to see if there was valid consideration to enforce such an agreement. If there is no adequate or independent consideration present, most courts will refuse to enforce such an agreement. This is to ensure that the noncompetition agreement is not an outright restraint on trade but, rather, the result of a bargained-for exchange that furthers legitimate commercial interests.
When a businessman sells his business, the purchaser may compete with him unless there is a valid restrictive covenant or covenant not to compete. The same is true when an employee leaves the employment of a company and begins soliciting customers of his former employer or competing with his employer in a similar way. When an ongoing business is sold, it is commonly stated in the sales contract that the seller shall not go into the same area or begin a similar business within a certain geographical area or for a certain period of time or both. Such an agreement can be valid and enforceable.
Restrictions to prevent competition by a former employee are held valid when they are reasonable and necessary to protect the interests of the employer. Courts will closely examine covenants not to compete signed by individuals in order to make sure that they are not unreasonable as to time or geographical area.
When a restriction of competition is invalid because it is too long or covers too great a geographical area, Courts will generally do one of two things. Some Courts will trim the restrictive covenant down to a period of time or geographical area that the Court deems reasonable. Other Courts will refuse to enforce the restrictive covenant at all and declare it void.
Caution: Statutory law in a few states completely prohibit covenants not to compete unless the covenant meets the state's statutory guidelines.
A non-competition agreement, also known as a non-compete agreement or a covenant not to compete, is a legal document commonly used in Oregon and other states to protect businesses from potential harm caused by employees or business partners competing against them. In essence, it prohibits individuals from engaging in certain activities or working for direct competitors for a specific period after leaving their current employment or business relationship. The Oregon General Non-Competition Agreement is a specific type of non-compete agreement that is widely used within the state. It is a legally enforceable contract that aims to safeguard the legitimate interests of businesses by preventing employees or business partners from taking unfair advantage of their knowledge, trade secrets, or customer relationships acquired during their time with the company. Under the Oregon General Non-Competition Agreement, individuals are typically restricted from engaging in activities that directly compete with the business they were associated with. This can include starting a similar business, working for a competitor, or soliciting current customers or clients. It is important to note that Oregon law places certain limitations on the enforceability of non-competition agreements. According to ORS 653.295, for a general non-competition agreement to be valid and enforceable, it must meet specific requirements such as being in writing, being signed by both parties, and providing a reasonable scope of restrictions in terms of duration, geographic area, and the specific activities prohibited. In addition to the Oregon General Non-Competition Agreement, there are other types of non-compete agreements that may be used in specific circumstances. These may include: 1. Executive Non-Competition Agreement: A contract that imposes non-compete obligations specifically on high-level executives or key employees, often with more stringent restrictions. 2. Sale of Business Non-Competition Agreement: This type of agreement arises when a business is sold, and the former owner agrees not to compete with the buyer's business for a specified period after the sale. 3. Partnership Non-Competition Agreement: Used when partners or co-owners in a business decide to leave or dissolve a partnership, preventing them from competing with the remaining partners or business entity. It is crucial to consult with an attorney familiar with Oregon employment laws to ensure that any non-competition agreement is properly drafted, tailored to specific circumstances, and in compliance with applicable legal requirements to maximize enforceability.A non-competition agreement, also known as a non-compete agreement or a covenant not to compete, is a legal document commonly used in Oregon and other states to protect businesses from potential harm caused by employees or business partners competing against them. In essence, it prohibits individuals from engaging in certain activities or working for direct competitors for a specific period after leaving their current employment or business relationship. The Oregon General Non-Competition Agreement is a specific type of non-compete agreement that is widely used within the state. It is a legally enforceable contract that aims to safeguard the legitimate interests of businesses by preventing employees or business partners from taking unfair advantage of their knowledge, trade secrets, or customer relationships acquired during their time with the company. Under the Oregon General Non-Competition Agreement, individuals are typically restricted from engaging in activities that directly compete with the business they were associated with. This can include starting a similar business, working for a competitor, or soliciting current customers or clients. It is important to note that Oregon law places certain limitations on the enforceability of non-competition agreements. According to ORS 653.295, for a general non-competition agreement to be valid and enforceable, it must meet specific requirements such as being in writing, being signed by both parties, and providing a reasonable scope of restrictions in terms of duration, geographic area, and the specific activities prohibited. In addition to the Oregon General Non-Competition Agreement, there are other types of non-compete agreements that may be used in specific circumstances. These may include: 1. Executive Non-Competition Agreement: A contract that imposes non-compete obligations specifically on high-level executives or key employees, often with more stringent restrictions. 2. Sale of Business Non-Competition Agreement: This type of agreement arises when a business is sold, and the former owner agrees not to compete with the buyer's business for a specified period after the sale. 3. Partnership Non-Competition Agreement: Used when partners or co-owners in a business decide to leave or dissolve a partnership, preventing them from competing with the remaining partners or business entity. It is crucial to consult with an attorney familiar with Oregon employment laws to ensure that any non-competition agreement is properly drafted, tailored to specific circumstances, and in compliance with applicable legal requirements to maximize enforceability.
