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General rule on non-compete agreements

Agreements not to compete are disfavored under Alabama law.

A. General rule in Alabama Code § 8-1-1(a): “Every contract by which anyone is restrained from exercising a lawful profession, trade or business of any kind otherwise than is provided by this section is to that extent void.”

B. Exception in Alabama Code § 8-1-1(b): "[O]ne who is employed as an agent, servant or employee may agree with his employer to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a specified county, city, or part thereof so long as the ... employer carries on a like business therein."

C. Similar exception for sale of good will of business.

D. The Alabama Supreme Court will enforce covenant if following conditions are met:
"(1) the employer has a protectable interest;
"(2) the restriction is reasonably related to that interest;
"(3) the restriction is reasonable in time and place;
"(4) the restriction imposes no undue hardship."
DeVoe v. Cheatham, 413 So.2d 1141, 1142 (Ala.1982).

[This is only a summary of a few cases. This is presented for informational purposes only. Contact a lawyer for an assessment of your situation.]

This entry was posted by Edward at 12:00 PM, 30 September 2006 | Categories: Non-competition

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