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Will I be bound to a non-compete after two buy outs?
Anonymous4 views2 answers
I signed a non-compete 16 yrs ago, since then the company has sold twice. I have not signed a new non-compete with the first buy out which happened about 3 years ago but was told it was transferable? The last buy out happened a year ago and nothing had been said and no non-compete has been signed either. Also the company I am considering now is not the same kind of company per say that I work for now although they do have a division that sells the same kinds of products or similar products. A number of my existing customers can purchase the new items I would have to offer with the new company, so the new company would also want me to be able to sell there products which are the similar products I sell them now. Can this non-compete hold up?
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That being said - good question!!
Issue #1: are non-competes transferable? Yes, they can be. If the contract is explicit about whether it can be assigned, I'd look to the contract to tell me if it was transferable. If it's not explicit, I would assume that it IS transferable. Also, you'd want to look at the business sale contracts to see if those contracts transferred the non-competes to the new company - if not transferred, the new company can't enforce it.
Issue #2: how long can a non-compete last? Only as long as is "reasonable." Courts will void non-competes if they are not reasonable in time or breadth - usually cutting them back to the reasonable limits. Unless the product you are selling is extremely unique, I don't see a court upholding the non-compete.
I am not licensed in Washington, so I am basing my thoughts on California law. Talk to a qualified attorney in Washington - in fact, your company should hire that attorney to find out for you, since the company stands to benefit by clearing up this matter. Good Luck!
My impression mirrors that of Mr. Olson. Washington courts will only uphold non-compete agreements so long as they are reasonable in time, location and subject matter. Given that it has been 16 years since you signed the agreement, I would be inclined to say that you are no longer bound. Only those agreements affecting the most critically sensitive information are usually held reasonable past five years, and fewer still survive beyond a decade.
I would strongly suggest taking the non-compete to an attorney for review, as this question can only truly be answered by a close look at the facts of your situation and the language of the agreement.*
*This answer is not intended as legal advice but merely general legal information. This answer is not intended to create an attorney-client relationship, and no such relationship has been formed as a result of this communication.