Non-Compete Agreements in the Sale of a Business

In addition to certain employment contracts, noncompete agreements are often used in situations where a seller transfers all or a substantial amount of the seller’s business to a buyer. Our Chicago business litigation attorneys know that noncompete agreements that arise from a sale of business are often easier to enforce than those that are contained in an employment agreement.

A noncompete agreement involving the sale of a business typically provides that, in exchange for a specified payment (which may be part of the sales price), the seller will promise not to go into a similar type of business within a certain geographic area for a specified period of time. Additionally, the agreement may provide that the seller cannot use confidential business process information - customer lists, for example - or trade secrets of the business being sold or share such information and secrets with others.

For example, consider a situation in which Seller, the owner of a pet store sells the store to Buyer. If Seller then opens a new pet store two blocks away from the one it just sold, Seller is likely to take a large number of potential customers away from Buyer. As a result, Buyer's pet store will no longer be worth the money that Buyer paid for it. In order to avoid the loss, Buyer should, as a condition of the sale, require that Seller agree not to open another pet store within the same area for a certain number of years.

As in an employment agreement, a noncompete provision in a contract for the sale of a business must be reasonable in scope. Based in the Chicago area, our business litigation lawyers can evaluate whether this is true. The noncompete agreement typically prohibits the seller from working in or being otherwise affiliated with businesses in the same or similar industries as the business being sold. If the agreement prohibits the seller from working in other, unrelated industries, it is likely to be considered unenforceable. Furthermore, the agreement must be limited geographically to the area in which the seller previously did business and in time to a reasonable number of years. The precise area and time span allowable depends on the nature of the transaction and the business being sold.

Noncompete agreements stemming from the sale of a business often raise complex issues for both buyer and seller. At Lubin Austermuehle, P.C., our Chicago business litigation lawyers represent businesses in sale transactions and noncompete agreement litigation. We can help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later and we can represent businesses - both plaintiffs and defendants - in the event that a noncompete issue later arises. We are pleased to assist clients throughout the Chicagoland area, including Naperville, Wheaton, Vernon Hills and many other cities throughout Illinois as well as clients in Indiana and Wisconsin.

To speak with a business litigation attorney at our Chicago firm, contact our law office by calling 833-306-4933 or 630-333-0333. You may also contact us by e-mail.

Chicago Business Litigation Lawyer Blog - Non-Compete Agreement / Covenant Not to Compete
Client Reviews
★★★★★
"I was referred to Peter Lubin from someone in the car business to handle a law suit. From the moment I made the appointment Peter and his staff were outstanding. This wasn't an easy case, most lawyers had turned me down. However, Peter took the time to meet with me and review everything. He took on the case, and constantly communicated with me about updates and case information. We beat this non-compete agreement case in record time. I would use him again and recommend him to my closest family and friends. 5 stars is not enough to thank him for his service." Sebastian R.
★★★★★
"I worked on two occasions with Peter Lubin and his staff. They took their time with me and discussed each and every item in detail. The group makes you feel like you are part of the family and not just another hourly charge. I recommend Peter to anyone who asks me for a referral. If you are looking for a top notch attorney at a reasonable rate, look no further than Lubin Austermuehle." Kurt A.
★★★★★
"Excellent law firm. My case was a complicated arbitration dispute from another state. Was handled with utmost professionalism and decency. Mr. Peter Lubin was able to successfully resolve the case on my behalf and got me a very favorable settlement. Would recommend to anyone looking for a serious law firm. Great staff and great lawyers!" Albey L.
★★★★★
"I have known Peter Lubin for over 30 years. He has represented me on occasion with sound legal advice. He is a shrewd and tough negotiator leading to positive outcomes and averting prolonged legal hassles in court. He comes from a family with a legal pedigree and deep roots in Chicago's top legal community. You want him on your case. You need him on your opponents case. He won't stop fighting until he wins." Christopher G.