Legal Question in Employment Law in California
Breaking a Non-Compete Agreement
I recently sold a business and signed a non-compete agreement with the new owner. However, the new owner has temporarily closed the business (due to flood damage) and may or may not re-open. Does this dissolve my non-compete agreement?
2 Answers from Attorneys
Re: Breaking a Non-Compete Agreement
No it does not. However, my understanding is that non-competition agreements are not enforced
under California law. I would verify that with a local attorney.
Re: Breaking a Non-Compete Agreement
No. One of the few exceptions to the rule that non-compete agreements are unenforceable in California, is where the party who agrees not to compete has sold their business to the other party. You cannot assume anything. If you wish to open a competing business, you will need to either agree to a written amendment to the existing contract or get the purchaser to agree in writing that the non-compete provision has been rescinded.
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