Businesses, large and small, often go to great lengths to develop and secure information and methods that give them an advantage over their competitors. A trade secret gives your business an edge.
Because of this, it can be catastrophic for a business when a trade secret is compromised. Employees or business partners may steal vital trade secrets, taking the competitive edge with them. That is why employment contracts and other business agreements often contain provisions specifically designed to guard against misuse of trade secrets. Trade secrets can be protected by court order, sometimes on an emergency basis if appropriate.
Care, good faith, and loyalty: these three fiduciary duties are primarily what ensures corporate compliance. It’s because of this that Directors, Officers, Managers and Partners are business titles that carry these fiduciary duties.
The duty of loyalty is particularly powerful in ensuring corporate compliance. Once you have established that a colleague has breached their duty of loyalty, the burden shifts to them. They have to prove that their action was fair to the company itself. If not, it is possible to obtain money from them and, in some circumstances, remove them from their position of power.
Noncompete agreements arise in a variety of circumstances. Notably, the agreements are included in contracts involving the sale of a business, employment contracts and agreements between co-owners of a business.
Although commonly recommended by contract attorneys, the court cannot fully enforce every noncompete. It may be enforced by a court order, sometimes on an emergency basis, but only if it meets certain legal requirements. The most important is the requirement that a noncompete be justified by a “legitimate business interest.”
If you are not sure if a noncompete is appropriate or not, we would be happy to consult with you.
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