This article refers to written non-compete agreements between a buyer and seller of a business. This is important, because California courts have determined that most non-compete agreements between an employer and employee are illegal and therefore unenforceable.

A non-compete agreement is a contract that prohibits the seller of a business from engaging in direct competition with the business they have sold within a limited period of time and within a defined geographical area.

Most non-compete agreements cover a period from 3 to 5 years and specify a radius from the sold business of 3 to 5 miles. Given that the law dealing with the enforceability of non-compete agreements is constantly changing, it is wise for both buyers and sellers of businesses to obtain the opinion of legal counsel on this subject. The goal is to protect the buyer, but not to unreasonably prohibit the seller from earning a living or engaging in business.

Written Contracts Required

The Statute of Frauds is a legal doctrine requiring certain types of significant contracts to be in writing and signed to be legally enforceable, preventing fraud and misunderstandings by demanding written proof for complex agreements like those involving real estate, long-term services (over a year), sales of goods over $500 (under the UCC), marriage promises, or guarantees for another's debt. Its primary objective is to provide evidence and caution parties in major transactions, though exceptions (like part performance) can make some oral contracts valid.

Indemnification of Business Buyer

Goodwill

Concerns Following Sale of Business or Merger

Additional Consideration - Sale of Business