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Blog: Pay Attention to Noncompete Agreements

Are non-compete agreements necessary when selling accounts? Ken Kirschenbaum answers in this blog.



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Question

It is my understanding that a non-compete agreement must be a separate contract. I recently sold accounts to another company, and they included a paragraph that I agree not to compete for a period of five years. I did not sell my company, but merely accounts. This is all I have been doing for 40 years, and I cannot sit idle.

Furthermore, the sales/purchase was not signed in front of a notary, yet they had a notary sign it as though it was. Is there some recourse here?

Answer

Yes, there is some recourse. Stand in front of a sheet rock wall and bang your head until you put a hole in the wall or a hole in your head. I won’t ask why you haven’t confronted your attorney who represented you in this transaction because I am guessing you didn’t have one. You should have called me before you agreed to sell.

If you only sold accounts — and not your company — then obviously you didn’t intend to go out of the alarm business. What you should have agreed to is that you won’t compete with your buyer with the accounts you sold, but that’s it.

Restrictive covenants do not have to be in separate agreements; they are customarily included in agreements dealing with sale of businesses or employment. State laws vary, some being more constrained in enforcement than others, but all states require that the restriction be fair and necessary to protect the interests of the buyer or employer. It’s not likely that you can be kept out of the alarm business just because you sold your accounts. I’d have to have a lot more information —and a lot more money for a retainer — to give you a complete response to your inquiry.

By the way, the notary isn’t necessary.


Article Topics
Blogs · Contracts · Laying Down the Law · Managing Your Business · Non-Compete Agreements · Selling Accounts · All Topics

About the Author
Ken Kirschenbaum
Security Sales & Integration’s “Legal Briefing” columnist Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters.
Contact Ken Kirschenbaum: ken@kirschenbaumesq.com
View More by Ken Kirschenbaum
Contracts, Laying Down the Law, Managing Your Business, Non-Compete Agreements, Selling Accounts


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