Legal Question in Business Law in California

Re: Non disclosure non compete agreements

Let's say for sake of discussion that the other company is based in Oregon ("OR").

I'm a California lawyer, so I can comment on CA law, but comparing its provisions with Oregon's is beyond me.

California favors competition and also free access to employment, so it has a statute, Business & Professions Code section 16600, that invalidates any contract clause that restricts a person from engaging in any lawful business, trade or occupation. However, California laws strongly discourage unfair competition; see B&P Code sections 17200 et seq.; also, California law prohibits misappropriation of trade secrets by adoption of the Uniform Trade Secrets Act, Civil Code sections 3426 et seq.

So, I would say the only aspect of your proposed agreement that would not be enforced in California is likely to be any provision by which one company is forbidden to engage in the business that the other operates. Maybe you don't need that provision if you also have protection against misappropriation of trade secrets and a strong unfair competition law. Further, I would expect that OR may also have a statute or judicial policy of not enforcing agreements not to compete where nothing unfair is involved on the part of the new competitor.

In addition to the choice of law question, there is the related issue of choice of jurisdiction. If you are working for a California company, you might want to ask yourself whether you want a CA court to try to apply OR law, or whether you'd want to try the case in OR using OR law.

Re: Non disclosure non compete agreements

Generally, non-compete clauses must be reasonable in scope, duration and geography. I would recommend having another state's laws (nevada, etc) as the jurisdiction for your choice of law provision.

Re: Non disclosure non compete agreements

You have not supplied enough information about the contract in which the non-disclosure/noncompete clause is needed. Is this for a buy/sell agreement? a joint venture of some kind? Will the parties be sharing or exchanging or disclosing confidential/trade secret information?

This is not an "employment" type arrangement that the previous answers seemed to address. The circumstances of the underlying agreement will determine the extent the "noncompete" provision will be enforceable. The nondisclosure aspect is enforceable under California law, so long as the protected information is not already in the public domain or available to the other side.

As for the choice of law provision, we would have to know what the other state is, and research the strength of that state's enforcement of such clauses. Then, the next question is whether you are likely to be the plaintiff/offended party or the defendant/offending party. On one side, you want the strong enforcement state. On the other, you want the weak enforcement state.