Negotiation & Deals

Non-competes

A non-compete is only worth its enforceability — and in employment, that varies enormously and has been narrowing, making many of them security theater the sale-of-business version isn't.

  • Beginner
  • 7 min total
  • 11 chapters

What decision this helps you make: Whether a non-compete would actually be enforceable where and against whom you'd use it — and if not, which enforceable alternative (non-solicitation, confidentiality, deal structure) to reach for instead.

What this topic is

Non-competes restrict a party from competing with the other for a period after the relationship ends — but their enforceability varies enormously (employment non-competes are often limited or banned; sale-of-business ones are widely upheld), so their value depends on where and against whom they'd be enforced.

Why it matters

An unenforceable non-compete is worse than none — it creates false security and invites challenge — and the reasonableness doctrine narrows or strikes overbroad ones, while more-enforceable alternatives (non-solicitation, confidentiality) often protect the real interest better.

Who should learn it

Anyone drafting or signing a non-compete — employers, sellers and buyers of businesses, contractors, and employees.

What you will understand

  • Enforceability varies enormously and has been narrowing — especially in employment
  • The reasonableness doctrine: scope, geography, duration
  • The context distinction: sale-of-business (enforceable) vs. employment (contested)
  • The enforceable alternatives: non-solicitation, confidentiality, deal structure

Prerequisites

Common misconception

"A signed non-compete protects you." A non-compete is only worth its enforceability, and that varies enormously: employment non-competes are limited, disfavored, or banned in many places (as restraints on the right to earn a living), and overbroad ones get struck down or narrowed by courts. A clause that looks strong on paper may be worthless in practice — which makes an unenforceable non-compete worse than none, because it creates false security while the real interest goes unprotected by the alternatives that would have held.