What are the requirements for a valid covenant not to compete and discuss whether or not this particular covenant is enforceable
Ginger is a Certified Public Accountant in practice by herself in Centerville. She merges her practice with that of Heap, Big, and Co. Part of the merger agreement states that if Ginger should ever leave Heap, Big, and Co., she promises not to practice public accounting in Centerville for a period of five years after leaving.
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The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may... more
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
This sounds suspiciously like a law school exam question. We don't do student's work for them.
Instead of answering your question, I suggest you start your research at Cal. Business and Professions Code, section 16601.
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They say you get what you pay for, and this response is free, so take it for what it is worth. This is my opinion based on very limited information. My opinion should not be taken as legal advice. For true advice, we would require a confidential consultation where I would ask you questions and get your complete story. This is a public forum, so remember, nothing here is confidential. Nor am I your attorney. I do not know who you are and you have not hired me to provide any legal service. To do so would require us to meet and sign written retainer agreement. My responses are intended for general information only.
As a general rule, covenants not to compete are illegal in California. California rejects the so-called "rule of reasonableness" that other states follow.
One exception is the sale of goodwill of a business. For example, a partner in a company who owns an equity interest, and subsequently sells her interest, could be subject to a reasonable covenant not to compete.
Covenants not to compete must be reasonable in time and geographical scope. The cases will generally uphold otherwise valid covenants that extend over a single city. Five years is at the outside margin of what I've seen courts uphold as a valid time restriction, and could go either way.
Disclaimer: Please be aware that I am not offering legal advice, nor forming an attorney-client relationship with... more
Disclaimer: Please be aware that I am not offering legal advice, nor forming an attorney-client relationship with you. I am not representing you, nor doing anything to protect your legal rights. If you believe that you have suffered a legal wrong, take action before any statute or limitations expires, or your right to do so may be lost forever. Good luck in your legal matter.
Non-compete agreements and employees
A non-compete agreement places restrictions on where and when employees can switch jobs to work for rival companies or to work in related industries.