Legal Question in Business Law in Indiana

No compete clauses

I am purchasing a division of the company I currently work for and in the sales agreement, the owner has written each party will not ''solicit the others employees nor will they employ an employee from the other company for 3 years.'' I do not feel comfortable signing this as I feel it could put me in a legal bind because basically I am preventing one of my employees from being gainfully employed if they chose to leave my company or move to an area served by this other company but I enforce the ''no hire'' clause of this sale. Truthfully, one of their employees has approached me and wants to work for me; none of my staff want to work for the current parent company because they have been treated like lower class, unimportant people. Another portion of the no compete states that I will not provide services in 4-5 counties of the state that neither one of us current serves. I agreed to not compete in the counties we are both presently serving but the owner added several others that are not being served right now by either division. This just doesn't feel right to me. Am I off or are they?


Asked on 1/22/08, 6:27 pm

2 Answers from Attorneys
Burton Padove Indiana and Illinois Lawyer, Burton A. Padove

Re: No compete clauses

This is pretty standard. However, I would limit the nonemployee clause to those employees in that division, only and lower the term to 18 months with "escape clauses".

Also, I question the inclusion of extra counties. Although, it could be that they have plans to expand into those counties dring the next three years. In which case, their request is not outlandish.

Also, remember, everything is subject to negotiation. You do not have to sign the docment as presented.

I would have an attorney represent me if I was you. If you are spending the money to purchase a division of a company, don't cheap out. There are other ways of cutting corners that wont jeopardize yor future ability to earn income.

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Answered on 1/22/08, 7:03 pm
Samuel Hasler Samuel Hasler

Re: No compete clauses

I agree with Mr. Padove - get an attorney. Buying a business has enough pitfalls that doing so without counsel who can review the documents is going to mean trouble. For instance, I interpret "parties" means something particular to me but what it means within the terms of contract is not clear,

I have been writing a bit about non-competition agreements (and the problems of departing employees) and these might give you some idea of the problems you are up against: http://haslerlaw.blogspot.com/2007/12/non-compete-agreements-when-selling.html

You can access all of the articles here: http://www.blogger.com/posts.g?blogID=7995228686790782537&searchType=ALL&txtKeywords=&label=Non-compete+agreements

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Answered on 1/23/08, 9:05 am


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