Though uncommon, a buyer of a business could be subject to nefarious actions on the part of the seller after the transaction that harms the business’s prospects. For instance, suppose the seller recognizes that a competitor is outperforming him and knows his own business is going to suffer. To mitigate his losses, the seller covertly makes an agreement with the competitor and they decide that if the seller refers his current clients to the competitor, the seller will receive some sort of monetary benefit. Without considering the legality or morality of this agreement, it is obvious that the seller is purposefully hurting his own business, which is soon to become the buyer’s business.
This is a serious situation that can be solved by signing a non-compete agreement. In this agreement, the seller agrees to not compete in any manner with his business being sold for a set time period. This includes not interacting with former or current clients, employees, or contractors in a manner that may hinder the business.
A non-compete agreement will generally contain language that allows the new business owner damages in the event a violation of the agreement has been made. Typically the agreement will allow that the costs associated with bringing the case to court will also be the burden of the former owner.
Read a sample non-compete agreement or click here to review other sample legal documents.
Utilizing this agreement is an easy way to protect yourself! Get help with a non-compete agreement today from Business Legal Services Inc by calling (703) 486-0700 or emailing firstname.lastname@example.org.