What to do if we sold a family owned business 3 years ago and my husband signed a non-compete clause for 5 year span but I didn’t sign?
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What to do if we sold a family owned business 3 years ago and my husband signed a non-compete clause for 5 year span but I didn’t sign?
Can we re-open the business since I did not sign it and can my husband be a part of the daily activities if he isn’t being paid?
Asked on November 16, 2012 under Employment Labor Law, Kansas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Can you compete, if you did not sign a noncompete--yes. A non-compete is a contract, and like any other contract, only binds the parties to it.
However, your husband would not be able to participate in any way, if this was a typical noncompete: that means no working for free, no providing facilities or capital, no providing advice or consulting, etc. To know exactly what he can and cannot do, he should review the noncompete with the help of an attorney--but as stated, typically, he'd be barred from any participation.
That means that even though you could legally compete, you should re-think whether you want to: if you compete, the company with the right to enforce the noncompete will assume that your husband--who is, after all, your husband--is involved and is helping out and will almost certainly take legal action to stop your business and/or recover compensation. You might win--though it's not guaranteed; for example, a judge and jury might refuse to believe that your husband is not involved--but even if you do, you will spend time, effort, and money defending yourself. It is probably a better idea to open a different kind of business, one that draws on your and your husband's expertise and experience but does not violate the noncompetition agreement.
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