Is my LLC held to the terms of a contract I signed as an individual prior to forming the company?
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Is my LLC held to the terms of a contract I signed as an individual prior to forming the company?
I signed a contract, as an individual, stating that I shall not directly or indirectly participate or own share of or benefit in any way from the operation of an entity doing business in the United States that markets or delivers a service similar to the services of this company. Can I work for a competitor through my LLC and not violate the terms of this contract?
Asked on June 14, 2012 under Business Law, Delaware
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
It's not that your LLC would be held liable under the contract: you would be. If the contract stated that you shall not participate in or own or benefit, etc. from a business delivering similar services, you cannnot do that under the guise of an LLC, either. The LLC would not be sued--it was not a party to the contract--but you would be; and the business suing you could seek both monetary compensation for your breach and a court order (injunction) barring you from working for the competitor. The contract you signed obligates you and restricts what you may do, regardless of the business structure you attempt to work under.
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