Helga owns an insurance business in Idaho. Her clients are all Idaho residents. She later sells her business to Carlos. As part of the deal, the contract contains a non-compete clause that prevents Helga from operating an insurance business anywhere in Idaho, Washington or Oregon for a period of five years. Six months after this sale, Helga opens an insurance business in Oregon. If Carlos seeks to enforce the non-compete agreement against Helga, will he probably be successful?

Question

Quizplus · Accepted Answer

Non-compete clauses are enforceable only to the extent that they are reasonable in scope and duration to protect a legitimate business interest of the employer. In this case, the non-compete clause prevents Helga from operating an insurance business not only in Idaho but also in two other neighboring states for five years, which seems too broad and not reasonable to protect Carlos' business interest. Therefore, Carlos is not likely to be successful in enforcing the non-compete agreement against Helga.

Helga Owns an Insurance Business in Idaho