Non-Compete Agreement

A legal clause or standalone agreement that prohibits a person from working for a competitor or starting a competing business for a defined period after leaving an employment or partnership arrangement.

Non-competes protect businesses from losing key knowledge to competitors through departing employees or partners. Founders must understand their own non-competes before starting a business and craft reasonable ones when hiring.

A founder hires a senior sales manager and includes a six-month non-compete clause in the employment contract preventing the manager from joining a direct competitor in the same geographic market for six months after leaving. She consults a solicitor to ensure the clause is reasonable enough to be legally enforceable.