Can a business enforce a “non-compete” agreement on a non-profit organization thereby preventing it from going with a less expensive competitor?

UPDATED: Jul 13, 2011

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Can a business enforce a “non-compete” agreement on a non-profit organization thereby preventing it from going with a less expensive competitor?

Our non-profit booster club has been purchasing retail coupon cards through a supplier for the past 5 plus years and selling them as our main fundraiser. When we were approached by another provider who can offer us more profit for the same selling effort, we approached our current vendor to terminate our arrangement. We were informed that as part of our agreement we cannot sell a competitive card or create our own coupon card for 2 years after terminating our existing arrangement. Is this enforceable?

Asked on July 13, 2011 under Business Law, New Hampshire


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Generally speaking, business and organizations--including non-profit clubs--are bound by the agreements they sign, including non-competition agreements. Therefore, from what you write, it would seem that the vendor could enforce the agreement against you. However, that is just a general answer; for a specific answer, you need to consult with an attorney who can evaluate the precise language of the agreement and situation for you. For example, various types of non-competition agreements are often "blue penciled" by courts to make them less restrictive (e.g. apply for a shorter period of time) if it is the case that the agreement is too far-reaching. Also, if there was some breach by the vendor, some misrepresentation by them during the negotiation of the agreement, and/or some confusion between the two parties as to what was being agreed too, that may suffice to provide grounds to void or at least modify the agreement. It is therefore worthwhile to consult with an attorney, to see what your rights and recourse may be.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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