Legal Question in Business Law in California

Re: sold bussiness want to work

whatever the agreement specifies. If you have to have it interpreted by an attorney, it should have been more clearly drafted. Feel free to contact me for consultation if you need to.

Re: sold bussiness want to work

It depends on the language of the covenant. Typically, you would not be able to own the same type of business, or work for someone who had the same type of business.

Re: sold bussiness want to work

It is impossible to answer your question without knowing exactly how the clause is worded.

Re: sold bussiness want to work

The enforceability of covenants not to compete in sale of a business situations is based upon the notion that a part of the price paid by the buyer is for the "goodwill" of the business. If an analysis of the selling price would show that the buyer bought some goodwill, the covenant not to compete would be enforced to the extent it is reasonable to protect the buyer's interest in the purchased goodwill.

Goodwill is an accounting concept; an accountant would have to advise whther there was goodwill, unless the sale agreement specifically allocated part of the purchase consideration to goodwill, and that's often done in professionally-prepared business sale agreements.

Reasonableness of the covenant not to compete is a legal issue that would ultimatlet be decided by the judge at trial. Generally, a 20-mile limitation would seem reasonable, but it is very fact-dependent.

Without knowing more, I'd say the covenant not to compete is more likely than not enforceable. That leaves the question as to whether your accepting employment within 20 miles is a breach. That's where it's necessary to know exactly what you agreed not to do. If you agreed not to work for a competitor, then working for a competitor would be a breach and you would be liable for damages.

The final questions, then, would be (a) how much is the buyer damaged? (b) Will the buyer sue? and (c) If the buyer sues, are you willing to endure the costs of a legal defense?

A strong possibility for you is to go to the buyer and get a written waiver of the covenant limited to this particular employment, maybe giving a nominal ($10) consideration.