A non-compete agreement, or covenant not to compete, generally is a contract in which one party agrees not to compete with another party in exchange for payment of some consideration. Non-compete agreements are most commonly found in employment contracts, particularly with management or sales employees; in agreements among shareholders or partners of a business; in contracts for the sale of a business; and in agreements for the funding of a business. Non-compete agreements are difficult to enforce, and must be carefully drafted to conform to the regulations of the state in which the agreement is to be performed.

Non-Compete Agreementsin Employment Contracts

In an employment setting, a non-compete agreement is a contract between an employer and an employee, which prevents the employee from working for a competing company and from divulging to third parties, including new employers, the confidential business and proprietary information, trade secrets, customer...