Non-Compete Clause

In one sentence

A contract provision restricting one party from competing in the same business or industry for a set time and location.

Plain English

A non-compete clause is a contractual promise that one party (usually an employee or seller) will not start or work for a competing business within a defined geographic area and time period. For example, a sales manager might agree not to work for a rival company within 50 miles for two years after leaving. Courts enforce non-competes only if they're reasonable in scope, duration, and geography; overly broad restrictions may be unenforceable. These clauses protect a company's customer relationships and trade secrets.

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Example

A restaurant manager's employment contract includes a non-compete clause preventing her from opening or working at another restaurant within five miles for three years after she quits.

Used in a sentence

“The non-compete clause in his consulting agreement prevented him from advising the client's competitors for 18 months.”

Related terms

Non-Solicitation Clause

A contract provision preventing one party from recruiting or doing business with the other party's employees or customers.

Exclusivity Clause

A contract provision requiring one or both parties to deal exclusively with each other and not with competitors.

Breach of Contract

Failure to do what a contract requires, without a valid legal excuse.

Good Faith and Fair Dealing

A legal duty to act honestly and fairly when making and performing contracts.

Consideration

Something of value exchanged by each party to make a contract binding.

Material Breach

A significant failure to perform a contract obligation that defeats its core purpose.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.