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In contract law, a non-compete clause (often NCC), restrictive covenant, or covenant not to compete (CNC), is a clause under which one party (usually an employee) agrees not to enter into or start a similar profession or trade in competition against another party (usually the employer).
There are limited situations where a reasonable non-compete agreement may be valid in California. Where the owner of a business is selling the entire business, or is selling the goodwill in the business, the seller may be bound by a non-compete clause. [20] When there is a dissolution or disassociation of a partnership. [21]
The U.S. Federal Trade Commission has proposed a rule that would ban companies from entering or attempting to enter a non-compete agreement with a worker. The rule banning non-compete clauses in ...
In most jurisdictions, courts routinely "blue pencil" or reform covenants that are deemed not reasonable. The blue pencil doctrine gives courts the authority to strike unreasonable clauses from a non-compete agreement, leaving the rest to be enforced, or actually to modify the agreement to reflect the terms that the parties originally could have and probably should have agreed to. [3]
Employees continue to receive their normal pay during garden leave and must adhere to their conditions of employment, such as confidentiality and non-compete clause, at least until their notice period expires. [4] An employer's main benefit from a garden leave is the ability to protect their businesses. [5]
Non-compete clauses in relation to contract law are also called restrictive covenants. Landlords may seek and courts may grant forfeiture of leases such as in leasehold estates for breach of covenant, which in most jurisdictions must be relatively severe breaches; however, the covenant to pay rent is one of the more fundamental covenants.
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