A non-compete agreement asks someone — usually an employee, contractor, or the seller of a business — not to compete with you for a set time and within a set area after the relationship ends. The catch: a non-compete is only worth writing if it is enforceable, and enforceability depends entirely on being reasonable. Overreach is the number-one reason courts throw these out.
Start from our free non-compete agreement template, and use this guide to keep it defensible.
Important: check whether you can use one at all
Non-compete rules vary dramatically by location. Some places enforce reasonable non-competes; others restrict them heavily or ban them for most employees entirely. Before you rely on one, confirm it is permitted for your situation in your jurisdiction — this is a document where legal review genuinely matters.
1. Identify a legitimate interest to protect
A non-compete must protect something real — trade secrets, confidential customer relationships, or a substantial investment in training or goodwill. "We just don't want competition" is not a legitimate interest and will not hold up. Name what you are actually protecting.
2. Keep the duration reasonable
Shorter is safer. Many enforceable non-competes run months to a small number of years; the longer you go, the more likely a court is to strike or shorten it. Match the length to how long your legitimate interest actually needs protecting.
3. Limit the geography and the activities
Restrict only the area where you truly compete, and only the specific activities that would harm your interest — not "any work in the industry, anywhere." A tightly scoped restriction is far more likely to survive than a broad one.
4. Provide consideration
The person must get something of value in return for the restriction — a job offer, a promotion, access to confidential information, or (for a new restriction on an existing employee) some additional benefit. Without consideration, the promise may be unenforceable. This is one of the core elements of a binding contract.
5. Add non-solicitation and confidentiality
Often a narrower non-solicitation clause (don't poach clients or staff) plus a strong confidentiality clause protects you almost as well as a full non-compete — and is easier to enforce. For pure secrecy, consider a separate NDA. Then have both parties sign; electronic signatures are valid for this kind of agreement in most places.
Disclaimer: This article is for general informational purposes only and is not legal advice. Non-compete enforceability varies widely and some jurisdictions ban them; consult a qualified lawyer before relying on one.