Legal Question in Business Law in Massachusetts

Re: Reach of non-compete agreements

The answer to your question as asked is probably yes, that the joint venture entity would have to adhere to the non-compete agreement. In general, any time a corporation merges or is bought by a larger one, or spins off a subsidiary, contractual obligations like this of the original company carry over to the new ones.

The unasked question is about the scope of the agreement; non-compete agreements can be found to be invalid if they are overreaching, i.e., if they prevent competition without good enough reason. (The classic example is the guy who sells

his barber shop and in his promise to not compete, says he won't cut hair within the state for a period of 50 years. Courts will not allow the buyer to enforce that provision; they would essentially rewrite it to say "within 5 miles" and maybe only for a year.)

However, my answer is really off-hand. I want to see the exact wording of the original non-compete agreement. To a lesser extent, I want to know the structure of the joint venture entity, particularly it's ownership and control.

If you like, fax me the wording of the non-compete agreement, to (617) 527-1763.

Good luck.