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Is a non compete for 5 years and/or a 50 mile radius unreasonable in New York State?

Albany, NY |

This was a sale of business in June 2011. The business was a dance studio. I sold my business of 5 years (been in the business for 25 years) to who I thought was a friend of mine. My husband was being transfered out of state for his job. After the sale was complete, my husbands transfer fell through and we were forced to move back home. This person I sold my dance studio to is enforcing the non compete we signed and will not budge. The terms are 5 years and/or a 50 mile radius. It has been 2 years since the non compete was signed. I now have the opportunity to work for a local dance studio as an employee. Will NYS uphold the noncompete terms even after 2 years? Is the 5 years/50 mile radius terms unreasonable?

I have been a dance instructor for over 30 years. It is my livelihood, which this non compete has taken away. I have no college degree, as dance instruction is all I have ever done to support myself and family. Having been unsuccessful in finding a job outside of dancing, my family had to file for bankruptcy in 2012.

Attorney Answers 3

Posted

Like most states the term must be reasonable and such is based on a case-by-case basis--but with the sale of a business they are not to keen on breaking the bargain struck between the buyer/seller--as it is not like you were an executive or other occupations that generally received no consideration for the non compete.

That said, a NY atty will be able to give you more info.

Legal Disclaimer: Richard W. Beck is licensed to practice law in Colorado. His answers are for general information and no Answer or Comment shall be deemed to create an attorney-client relationship or create any right of confidentiality. The reader should never assume that this information applies to his or her specific situation or constitutes legal advice. Therefore, please consult an appropriate attorney in your jurisdiction and who is familiar with your specific facts and all of the circumstances as there is likely a time limit related to the question that could expire at any time and you would lose any rights you had.IRS CIRCULAR 230 DISCLOSURE: As required by U.S. Treasury Regulations governing tax practice, you are hereby advised that written advice contained herein (if any) was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

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1 comment

Richard W Beck

Richard W Beck

Posted

http://www.schnader.com/files/Publication/5c8e030c-f56d-4ca5-8b99-64285517ae37/Presentation/PublicationAttachment/8e904049-326e-4b02-b721-6dd5df6c2dfe/Non%20compete%20laws%20in%20New%20York%20Q%20and%20A_February%202011.pdf

Posted

There are never any guarantees, but since you sold the good will at the same time that you sold your business, a court more likely than not would enforce the agreement. Ordinarily 5 year agreements are considered too long, but when you sell a business, you are covenanting not to solicit clients, and therefore courts are more apt to enforce figuring it is a negotiated term. The 50 mile radius would likely be found to be reasonable even if you did not sell the business.

If you'd like to discuss, please feel free to call. Jeff Gold Gold, Benes, LLP 1854 Bellmore Ave Bellmore, NY 11710 Telephone -516.512.6333 Email - Jgold@goldbenes.com

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2 lawyers agree

Posted

I would generally agree with Attorney Gold, but would question whether, considering the nature of your business, the 50 mile radius is to much. No real answer can be given though without reviewing the sales agreement and performing research of recent case law. You need to hire an attorney, in your geographic area, to assist you.

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