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Arlington Heights business law attorneysWhen an individual purchases a business, they are not only buying the physical assets associated with that business. They are also taking ownership of more abstract assets like the existing customer base, the name and reputation of the business, and intellectual property. Understandably, someone who buys a business wants to ensure that the value of these intangible assets is not reduced because the original owner of the business is opening a competing business in the same market. This is just one of many situations in which a non-compete agreement can be beneficial.

How Does a Non-Compete Agreement Work?

Put simply, a non-compete agreement is a legally-binding contract involving a promise not to enter into business competition of some kind. Non-compete clauses are most often used to prevent an employee from working for a competitor or starting a business which competes with his or her employer’s business. These agreements can also include a provision prohibiting the employee from disclosing proprietary information to other parties. Non-compete agreements are often also required of business consultants and contractors.

Non-Compete Agreements Must Meet Certain Criteria to be Enforceable

Of course, a non-compete agreement cannot simply instruct an employee to never again work in a certain field. The scope and duration of a non-compete must be reasonable for the contract to be valid. Illinois courts have ruled that non-compete agreements are only valid if certain criteria is met. It is advised that any business utilizing a non-compete in Illinois provides employees with continuous employment for at least two years as well as additional consideration in the form of perks like bonuses or higher compensation.

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Illinois business lawyerFor many business owners and, in fact, people in everyday life, a promise and a handshake mean more than anything that could be captured in a legally binding document. The physical manifestation of a person giving his or her word regarding an agreement or transaction still carries a great deal of psychological weight, even in today’s litigious society. While it would be wonderful to be able to consistently rely on another’s good word in business dealings, the reality is that contracts are often necessary, and, sometimes, one party fails to comply with his or her end of the deal. When that happens, your only option may be a breach of contract claim.

Three Main Elements

All contracts represent some form of a legally enforceable promise. Some, of course, are more complicated than others, but all provide certain rights and responsibilities to each involved party. In the context of business, most contracts address the purchase of items, goods, or services rendered. When the other party fails to comply with the terms of an agreed-upon contract, you may be able to bring a claim for breach of contract before the court. To win your claim, you will be required to show:

  • A Valid Contract Exists: Contracts can be written or oral, although oral contracts may be more difficult to prove. To prove the validity of the contract, you will need to demonstrate that there was an offer, that the offer was voluntarily accepted, and the contract included reasonable consideration for each party;
  • Breach of Terms: You must be able to point to specific parts of the contract that the other party has violated. For example, if the other party was contractually required to deliver a certain product by designated date, once the date has past and the product has not been delivered, the court may determine the missed deadline to be a breach of contract. In general, the breach must have had an effect on the value of the contract to you in order for the claim to be considered; and
  • Breach of Contract Damages: Beyond the fact a provision of the contract was violated, you will also need to prove that you or your business suffered harm due to the breach. Damages generally include lost money, time, and other measurable losses, and, in some cases, the court may also award punitive damages as well. Provisions in the contract that address breaking the contract, including specified penalties or fees, could also be enforced.

While you have every right to enforce a valid contract, you will also want to be sure that you have fulfilled your contractual obligations before moving forward with a claim. You cannot expect a court to hold the other party responsible for breach of contract if you have breached its terms as well.

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Illinois State Bar Association DuPage County Bar Association Northwest Suburban Bar Association American Inns of Court DuPage Association of Woman Lawyers National Association of Woman Business Owners Illinois Association Criminal Defense Lawyers DuPage County Criminal Defense Lawyers Association
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