Is my non-compete agreement still valid?

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Is my non-compete agreement still valid?

I sold my small dog grooming salon in 2008. The agreement was typed up by the buyer and we signed it with no notary or courts involved. It restricted me from opening another grooming salon in the same county forever. About a year later the new owners sold it to someone else. Am I still bound to this agreement?

Asked on January 2, 2017 under Business Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

As to whether the agreement goes to the new owner(s), it depends on whether 1) the buyer's business had been an LLC or corporation (that is, the other party to the agreement was an LLC or corporation, not the buyer personally) and the new owners bought the LLC or corporation--if they did, then you are still bound, because you're still obligated to the same LLC or corporation, which simply happens to have a new owner; or 2) if the business had not been an LLC or corporation, or it had been, but the new owners only bought the assets, not the LLC or corporation, the agreement was specifically "assigned" to (taken over by) the new owners. So you may be bound, but it's not definite, since if you'd agreed to not compete with a specific individual but the contract was not assigned, or you'd agreed to not compete with an LLC or corporation which was not purchased (the business structure not bought, only the assets) and the contract, again, not assigned, you'd no longer be bound.
More importantly, even the contract *would* have been in force, it probably is not enforceable any longer. Most states, and especially your own, do not like non-competes; even when the enforce them (which your state does), they tend to cut them down to "reasonable" durations and geographic scope. Your state generally does not enforce "forever" non-competes as being unreasonable (it usually enforces ones of 1 - 3 or so years duration), so there is a reasonably good chance that this agreement would not be enforced against you.


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