Beware of the noncompetition agreement whose only purpose is to neutralize you. An out-of-state employer can put a restriction in your noncompete contract that wouldn’t be enforceable under Virginia law, but that is perfectly enforceable under the law of the other state.
If the contract chooses the law of that other state, and if you sign the contract, then a Virginia court will apply the law of the other state.
Please visit the latest issue of Valley Business Front November [PDF link] for a case study on this topic.
And if you’re interested in learning more about your noncompete, join us at our next round of Shark Bites this month.
Starting up takes a lot. A lot of time. A lot of energy. Perhaps a lot of money. And definitely a lot of planning. At the very beginning, a business owner is looking for revenue, low costs, and maximum upside, in an understandable effort to build a foundation for an economically sustainable enterprise. Having an economically sustainable enterprise–especially one that may eventually be sold–requires sufficient planning to document the assets of the firm and to ensure the firm legally owns those assets. With assets often come certain liabilities, completing the picture and value proposition of the business for owners, investors, and potential purchasers. As tempting as it can be to pass on early legal planning for a business in light of other demands that feel more immediate, that planning will show its value for a business of any size or type when avoiding headaches, heading off informal disputes and even full-on litigation. Learn the core legal considerations for a business in its inception stages, along with the pitfalls you can plan around as you build your business.
We have previously addressed common contract issues people have brought to us (here, here, here, and here.) People often come to us wondering whether a form contract they have discovered somewhere in the nether regions of the internet will “work” to arrange their business affairs and satisfy their legal needs. Form contracts can be very good or very bad–and the very bad inevitably lead to messy, contentious, and difficult litigation. We know–we have seen it first hand.
Here are a few reasons why you should not rely on form contracts you find on the internet.
We’ve written a lot about legal issues relating to contract formation and some general contract terms (for instance, here, here, and here). A common kind of contract we have yet to discuss is the non-competition agreement. More generally belonging to a class of agreement known as “restrictive covenants,” which also include non-solicitation agreements, a non-compete agreement purports to restrict an employee of a business from competing against his employer during the employment or for some time once the employment ends. Every business should understand that these kinds of agreements must adhere to certain limitations for a judge to consider enforcing them. These limitations, which we review below, are required because the law permits a business only to restrict competition to the extent necessary to protect its legitimate business interests in a reasonable manner.