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Non-competes and legal scrutiny

Companies want to protect their interests, and employees want to have assurances of their employment. These area two truths about the world of business. One of the ways that these things are maintained is non-competition agreements, often called NDAs (for "non-disclosure agreement"). A non-competition agreement prevents an employee or prospective employee from passing on critical information or trade secrets to competitors if they were to move on to a different company. It also forces a company to give the employee something in return, which is usually a job.

But non-competition agreements have come under heavy scrutiny recently, and as such it is important for both companies and employees to realize that these contracts need to stay within certainly guidelines in order to be valid.

The three crucial points to a non-competition agreement's validity are consideration, duration and scope. The contract must be supported by consideration by both parties when it is signed. The contract also needs to be reasonable in its duration and scope. What this means is that the non-competition agreement must protect legitimate business interests, be thoughtful in how long it stays in effect, and also not prevent an individual from seeking employment in an industry.

Non-competition agreements come under legal scrutiny quite often, and it is important to fully consider and look over a non-compete -- whether you are a business or an individual. If you are confused about your legal situation, then consult with an experienced attorney.

Source: FindLaw, "Non-Competition Agreements: Overview," Accessed April 25, 2017

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