Barb has been a children's day care provider for several years in the small town of sallton. she has decided to give it all up and move to the big city for excitement and adventure. she sells her business to ken, agreeing not to open a competing business within five miles of sallton for a period of nine months. after five months of the big city life, barb is broke and moves back to sallton. she opens a small day care business. ken sues on the noncompete clause. what is the most likely result?

Ken wins the law suit and Barb loses. The agreement between the two is enforceable.

Explanation:

Barb sold her business to Ken on the condition that she will not open a similar business within 5 miles of Sallton within 9 months of sale. Barb however, breached the agreement by opening similar business, that is day care service in Sallton after 5 months of sale. Ken files a lawsuit on non-compete grounds and wins as Barb indeed breached the non-compete clause in the agreement.

Further explanation:

Non-compete clauses which are common between an employer and employee that prohibits employees from starting a business in similar lines within a stipulated time after they end their employment with the respective employer. This clause is enforced to protect confidential information of companies and their core strategies. It is also called restrictive covenants.

Non-compete agreements, like any other agreement should have valid offer and acceptance and consideration. Both the parties must agree to the terms stated in the agreement, which should be clear.

The agreement should also have the time period that binds the parties to the agreement. Certain states do not enforce non-compete agreements as these clauses can be too restrictive or even hamper employment growth.

Here, both Ken offered and Barb accepted the terms of the agreement for consideration that was part of sales. So, the clause is enforceable.

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Keywords: Non-compete clause, non-compete agreements,  restrictive covenants, valid agreement, enforceability of non-compete agreements.

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