The FTC’s new rule barring the use of noncompetition agreements contains a specific provision permitted the use of these agreements related to the sale of a business. Everyone involved in the sale process–sellers, buyers, brokers, accountants, and all other advisors–need to remember each state’s noncompete laws remain the same if the rule is upheld.
The Delaware Superior Court recently ruled it is ready to enforce a seven-year noncompetition agreement against sellers of a business. In Active Day v. Wehr, the Court explained that the Plaintiff’s alleged damages would stop accruing after the end of the seven-year provision. Nor did the Court raise any suggestion that the seven-year period was unenforceable under Delaware law.
Experienced attorneys will continue to negotiate this term of an Asset or Stock Purchase Agreement accordingly.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, and other issues. In particular, he has a significant amount of experience in hospitality law by representing third party management companies, owners, and developers.
He can be reached at david@seidmanlawgroup.com or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.
