covenant not to compete


Also found in: Acronyms.

covenant not to compete

n. a common provision in a contract for sale of a business in which the seller agrees not to compete in the same business for a period of years or in the geographic area. This covenant is usually allocated (given) a value in the sales price. (See: covenant)

References in periodicals archive ?
Or the employee must refrain from providing services for two or more additional years under a qualified covenant not to compete.
In that case, the California court explained that the selected Illinois law, when applied to the covenant not to compete issue, would dictate a result contrary to a fundamental public policy of California law.
In short, the ethical suitability of an attorney covenant not to compete "was viewed in these early advisory opinions as dependent upon the relative bargaining power of the lawyers and issues of fairness among lawyers, rather than upon any articulated potential for harm to the clients.
Citing Martin Ice Cream, the Norwalk court stated that "there is no salable goodwill where, as here, the business of the corporation is dependent on its key employees, unless they enter into a covenant not to compete with the corporation or other agreement whereby their personal relationships with clients become property of the corporation" (Martin Ice Cream, 110 TC at 207).
Section 197(d)(1)(E) specifies that a section 197 intangible includes "any covenant not to compete (or other arrangement to the extent such arrangement has substantially the same effect as a covenant not to compete) entered into in connection with an acquisition (directly or indirectly) of an interest in a trade or business or substantial portion thereof.
Rather, the long-standing view has been that to be enforceable, a covenant not to compete must protect an employer's interest in a trade secret or in other 'confidential information.
The agreement did not contain a covenant not to compete because such restrictions are invalid in California.
The negative impact the covenant not to compete had on the patients' right to see the departing physician came into play and outweighed the employer's interests.
The restriction in a covenant not to compete must also be reasonably related to the employer's protectable interest.
Courts employed various tests to ensure that employees who could be terminated at will had received valid consideration in return for signing the covenant not to compete.
3 to get him immediately off the air and a lawsuit for breach of contract and infringing on a covenant not to compete, or non-compete clause.

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