Articles Tagged with Non-compete and NDA lawyers near Chicago and Oak Brook

Covenants not to compete and non-solicitation agreements are frequent fixtures of employment agreements. They are also frequently found in operating, shareholder or partnership agreements. Though courts and legislatures across the country have become increasingly hostile to the notion of enforcing non-compete agreements against employees, courts have not displayed a similar reluctance to enforce restrictive covenants in shareholder disputes.

When shareholders have a dispute or desire to sell their interest in a company, restrictive covenants seek to protect the existing company and shareholders by placing limitations on what departing shareholders can and cannot do in terms of competing with the business. Non-compete agreements place limits on where and when and how a departing shareholder may compete against the company. Non-solicitation agreements place limits on who the departing shareholder may solicit for business or employment. Typically, non-solicitation agreements prohibit a departing shareholder from contacting the company’s customers or employees to convince them to leave for the departing shareholder’s new business. In disputes involving a departing shareholder, courts will often side with the existing business against a shareholder who has left the company and now seeks to compete against it.

As in every case involving restrictive covenants, whether a non-compete or non-solicitation agreement is enforceable depends largely on the language of the covenants in the applicable agreement. When deciding whether to enforce a non-compete or non-solicitation provision in a shareholder agreement, court will consider the reasonableness of the restraints. Continue reading ›