Pursuant to the general common law, an an agreement that restrains or prevents a person or business from performing a lawful profession, trade or business is generally considered to restrain free trade and is not favored by the courts. There are some exceptions to this general rule. A majority of states will treat as valid a contract in writing containing reasonable terms with sufficient consideration and usually relating to the sale of a business or a contract for employment. An example of restraint of trade that some states will allow is an agreement to refrain from carrying on a similar business within a given area and for a specified time period. In general, covenants not to compete with an employer upon termination are usually enforceable. There are many issues involved in enforcing a contract not to compete, such as, customer relations, customer lists, and business trade secrets. To determine the specific laws of your state as to covenants not to compete, please seek the advice of an attorney.
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