QUESTION
Is it legal to start a business with similar names to one you recently sold if there is no non-compete clause written out?
Asked on Jun 05th, 2012 on Business Law - Minnesota
More details to this question:
I just bought a business whom the previous owner was highly recognized in our small town area. After selling the business he then formed a new busines with a very (extremely) similar name, and is subcontracting for other businesses. I looked things over and there is no non-compete clause written up, as we are new to the whole buying a business thing. I talked to our banks we got the loan from (I told them it was more or less their fault we didn''t have a non-compete clause, as they deal more and know more about this thing than what we do) and they didn''t really give me an answer. This guy is very shadey and has a way of talking his way into alot of things I dought are legal. I don''t know what to to with this, I fear this is hurting my businsess...
2 ANSWERS
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One would have to read the non-compete to give any kind of analysis. Blaming the bank is totally groundless and shows how experienced you are. You need to reduce all the details to writing and take that writing and the contract to a business lawyer to evaluate and tell you if you have a case under MN law regarding breach of contract and unfair competition and perhaps under other legal theories.
Answered on Jun 16th, 2012 at 3:58 PM
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Welcome to America, where, in the absence of an agreement to the contrary, anybody can go into competition with you. You, not the bank, made a mistake; you entered into a commercially important transaction without a review of the relevant documentation by competent legal counsel acting on your behalf. The bank had no duty to make such a review. If you had intended the seller not to compete with you, you needed to negotiate for and receive that assurance in your contract.
Answered on Jun 06th, 2012 at 9:48 AM