Non-Compete Clause
A contractual provision restricting one party from competing with the other for a specified period and area.
Non-compete clauses prevent employees, contractors, or business sellers from starting or working for competing businesses within a defined geographic area and time frame. They protect trade secrets, client relationships, and business investments.
Enforceability varies dramatically by jurisdiction. Many states limit duration (typically 1-2 years), geographic scope, and the types of activities restricted. Some states, like California, largely prohibit non-competes for employees.
Example
A departing executive agrees not to work for a direct competitor within 50 miles for 18 months after leaving the company.
Related Terms
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