Is it reasonable to agree to a non-compete clause in an assets purchase agreement?
By Giselle Ayala Mateus
Greetings, if you want to enter into an asset purchase agreement, it is important to consider that each jurisdiction has different interpretations of what a reasonable non-compete agreement is. Besides, considering the time and geographical scope of the agreement, courts are also concerned about the fact that a person has the right to work and to earn a living. For this reason, some agreements establish strict conditions to execute the restrictive covenant so that the seller of a business can earn a living without affecting the goodwill sold to the buyer. It is also important to consider the characteristics of the business. If the business is one that requires a principal location and operates locally such a salon or an small store, the scope of the agreement should be limited. However, if the business is one of the kind that requires visiting clients in different locations, the time and geographic scope of the agreement can be broader.
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