Non-Compete Agreement

AAA

DEFINITION of 'Non-Compete Agreement'

An agreement between two parties, typically an employee and employer, where the employee agrees not to use information learned during employment in subsequent business efforts for a set period of time. Employers usually insist on non-compete agreements because of the possibility of an employee, upon termination or resignation, working for a competitor or starting a business, and gaining competitive advantage by abusing confidential information about their former employer's trade secrets or sensitive information such as customer/client lists, business practices, upcoming products and marketing plans.

INVESTOPEDIA EXPLAINS 'Non-Compete Agreement'

In some states, non-compete agreements are extremely difficult to enforce. Some jurisdictions, such as the state of California, do not allow non-compete-clauses at all. A very popular example of a non-compete agreement dispute is the case of Kai-Fu Lee, a Google executive who used to work for Microsoft. In this case, Kai-Fu Lee left Microsoft and started working for Google within one year of a signed non compete agreement..



RELATED TERMS
  1. Non-Disclosure Agreement - NDA

    A legal contract between two or more parties that signifies a ...
  2. Confidentiality Agreement

    A legal agreement between two or more parties that is used to ...
  3. Confidential Treatment Application

    A form filled out in accordance with a company's 8-K, 10-Q, ...
  4. Material Insider Information

    Material information, about certain aspects of a company, that ...
  5. Disclosure

    The act of releasing all relevant information pertaining to a ...
  6. D’Oench Duhme Doctrine

    A banking rule which states that a borrower or guarantor cannot ...
RELATED FAQS
  1. What are the primary disadvantages of forming a joint venture?

    A joint venture is a common method to combine the business prowess, industry expertise and personnel of two otherwise unrelated ... Read Full Answer >>
  2. Where can I find a company's annual report and its SEC filings?

    Thanks to the Internet, finding financial reports is easier than ever. Nowadays, every reputable company has an investor ... Read Full Answer >>
  3. Are waivers of subrogation clauses ever ineffective in preventing a third-party lawsuit?

    Sometimes waiver of subrogation clauses are ineffective at preventing a third-party lawsuits. In determining who is responsible ... Read Full Answer >>
  4. What is an alienation clause?

    Whether used in reference to insurance policies, mortgages or commercial loans, an alienation clause stipulates that should ... Read Full Answer >>
Related Articles
  1. Personal Finance

    Want To Know What Disclosures Mean ... In Plain English?

    Disclosures are the fine print in financial reports. We strip away the legal speak to tell you what they really mean.
  2. Options & Futures

    Can Insiders Help You Make Better Trades?

    Find out why the trading activity of owners and executives can be a valuable trade-confirmation tool.
  3. Investing

    Digging In To 13D Disclosures

    This document can provide important clues about a company and its stock.
  4. Economics

    Understanding Covenants

    A covenant is a term placed in a loan that requires the borrower to either maintain or refrain from certain business activities.
  5. Economics

    What is Earnest Money?

    An earnest money deposit shows the seller that a buyer is serious about purchasing a property.
  6. Retirement

    Time To Hire A Senior Move Manager?

    Watch for these signs that you or an elderly family member may need to downsize and move somewhere easier to manange. A senior move manager can help.
  7. Retirement

    A New Solution To Help Seniors Relocate

    As Americans age – and families try to cope – the new field of senior move managers helps seniors relocate to safer homes with the least possible stress.
  8. Investing Basics

    ISDA Master Agreement

    The ISDA Master Agreement is a document outlining the terms of an over-the-counter derivatives transaction between two parties. This document serves as a standard agreement in these transactions ...
  9. Budgeting

    4 Contract Essentials You Need to Know

    Over your lifetime, you’ll be asked to sign lots of contracts – perhaps agreeing to purchase a home, a car or to join a new gym or online dating service.
  10. Home & Auto

    Home Sale Contingencies: What Buyers And Sellers Need To Know

    Home sale contingencies protect buyers who want to sell one home before purchasing another. Find out what buyers and sellers need to know about these contractual conditions.

You May Also Like

Hot Definitions
  1. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  2. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  3. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  4. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  5. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  6. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!