Can a non-compete document be enforced in one state if the documents stipulatethat it will be governed by the laws of another state?

UPDATED: Aug 22, 2011

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Can a non-compete document be enforced in one state if the documents stipulatethat it will be governed by the laws of another state?

I am a salesman and am in the process of getting a job. I have 18 years of experience and many contacts and people with whom I have done business. I am being asked to sign a non-compete agreement that states that it will be governed by the laws of MN although the company HQ is here in CA where I live. CA law says that it is void but I am concerned about the MN part.

Asked on August 22, 2011 California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

A contract, including a non-competition agreement (since that's what a non-compete is: a contract) can be enforced in state A if it's governed under the laws of state B. That even includes when state A would otherwise not enforce the agreement. That's because

1) two parties may agree to apply the law of any jurisdiction; and

2) the courts of a state will enforce the choice of law that the parties to a contract made in their agreement.

So if you agree to have the non-competition agreement governed by the laws of MN, it will be enforceable per MN laws notwithstanding that it would otherwise be not enforceable in CA. You should familiarize yourself with the MN laws to make siure you're comfortable with it...or else try to negotiate some limitations or changes in the agreement before signing.


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