Business relationships can be complex, particularly when trade secrets and intellectual property are involved. To protect this sensitive information, many businesses turn to non-disclosure and non-compete agreements. Our skilled contracts attorneys can assist in drafting these documents.
These agreements can be powerful tools, but the courts pay close attention to determine if they are valid under the law. It is not uncommon for judges to strike down these agreements when they are drawn to broadly. Our trusted Kernersville non-disclosure and non-compete agreement lawyers at Apple Payne Law can help ensure these contracts meet the standard set out by state law.
State law sets strict limits on non-compete agreements. In general, the courts disfavor these agreements as they limit the right of individuals to pursue their chosen business interests. However, under certain circumstances, the courts will uphold a non-compete agreement if it is narrowly tailored to the circumstances. A dedicated attorney at Apple Payne Law can assist with keeping the scope of non-disclosure and non-compete agreement in line with state law.
A business might have plenty of reasons to insist on non-compete agreements with employees. When employees obtain sensitive information or trade secrets, little prevents them from leaving to form a competing business with that information in hand, something a non-compete agreement is designed to prevent.
The problem is that many non-compete agreements go too far in the eyes of the law. These agreements have four important elements, and courts will typically strike them down should they not comply.
Like any contract, consideration is required for a non-compete agreement to be valid. That means, in exchange for agreeing not to compete with the business in the future, the employee receives something in return.
These agreements can only limit certain activities of a former employer. While preventing them from operating in a similar capacity as their previous employer might be valid, barring that person from totally unrelated work would not hold up in court.
Non-compete agreements require a time limit. The court will strike down agreements with unreasonable time limits. Typically, any term beyond two years receives substantial scrutiny from the courts.
Geographical restrictions apply to non-compete agreements as well. An agreement is more likely to be struck down if it does not limit the scope of the agreement to the area where the employer currently does business.
Non-disclosure agreements—also commonly referred to as confidentiality agreements covenants not to compete—are often seen as less restrictive than non-compete agreements. That does not mean a court will not strike down these agreements under the right circumstances. In fact, the law generally approaches these agreements with the same degree of skepticism as it applies to non-compete clauses.
Unlike non-compete agreements, the law does not require confidentiality agreements to set restrictions on time and territory. Therefore, an open-ended non-disclosure agreement does not inherently violate the law.
To comply with the law, these contracts may be unlimited in time in order to protect a legitimate business interest. If a party cannot articulate a legitimate interest that would be put at risk by time limits on the non-disclosure agreement, a court could strike down the confidentiality clause entirely, which is why having a competent lawyer at Apple Payne Law help properly draft these for the business’s interests is crucial.
If you are concerned about protecting the interests of your business, non-disclosure and non-compete agreements could be the answer you are looking for.
State law places strict limitations on when these agreements are valid. Get in touch with our Kernersville non-disclosure and non-compete agreement lawyers at Apple Payne Law.
Apple Payne Law, PLLC