Legal Question in Business Law in California

Re: contract

Fax me a copy of the contract. I'll give an opinion.

Re: contract

Without commenting on the validity of the non compete clause, the contract you signed may have been assigned to the new owner as part of the deal. If so, the new owner would argue that he/she is entitled to enforce the contract.

Re: contract

The answer depends upon what the contract says. Most likely, you made your agreement with the business and not with its owner; if that is the case, the change in ownership would make no difference. Even if you made the agreement with the owner, he was probably permitted to assign his rights to the new owner.

Of course, if the non-compete clause was never valid to begin with. It may not have been. You might want to review the contract with a lawyer to see if you have to abide by that part of it.

Re: contract

This is one of those RTFC (Read the Friendly Contract) questions. What does the contract say? What does your lawyer who originally reviewed the contract say?

Re: contract

I don't think it depends so much upon what the non-compete clause says or doesn't say; I think your question invokes the basic law of assignment and delegation of contract rights and duties. Unless the contract by which the property management business was sold contains some unusual terms preventing assignment and delegation, the person you sold to has the power to assign the benefits of your covenant not to compete to his successor when the business is resold.

Here's an example. Mortgages (notes secured by deeds of trust) are often sold by the originator to another financial institution. In those loan agreements, the borrowers agree with the lender not to do certain things, e.g., do illegal things, pollute, or commit waste on the property. No one would question the right of a downstream purchaser of the loan to enforce those covenants against the borrower.

Similarly, I believe, the benefits of the covenant not to compete will inure to downstream purchasers of the business, by assignment.