Is a non-compete still valid if the terms of original contract are changed and I refuse to sign new

Before I respond to your inquiry, I must state that we have not spoken, I have not reviewed the relevant documents and facts, and I do not represent you. Therefore, my discussion below is not a legal opinion, but is informational only. Finally, my discussion applies only to issues to which Pennsylvania or Federal law apply, unless otherwise specified.

That being said, noncompetition agreements are contracts that have a number of extra requirements for them to be enforceable, such as 'substantial consideration,' whether the employer has a 'legitimate business interest' in enforcing the agreement, etc.

There are a number of variables that aren't clear from your question. The first variable is whether the new contract has a noncompetition agreement in it. Other variable are:

1. Is the change in compensation significant? If so, the original noncompetition agreement may become ineffective for failure of consideration.
2. Is your 'employment' terminated due to your refusal to sign a new agreement? If so, the noncompetition agreement may become ineffective due to the employer's not having a 'legitimate business reason' for enforcing it.
3. Has your employer breached its obligations under the first contract - i.e., have they begun paying you less? If so, the noncompetition agreement may be unenforceable.

Furthermore, if you are truly a contractor, the agreement may not be enforceable in Pennsylvania at all - generally, it has to be ancillary to a valid employment agreement (not contractor agreement) or to a contract for the sale of a business. There is some ambiguity surrounding how narrow this requirement will be construed by the courts, however.

If you would like to discuss this matter further, please feel free to contact me at the below address(es) or number.

/Christopher E. Ezold/
Nancy O'Mara Ezold, P.C.
One Belmont Avenue,
Suite 501
Bala Cynwyd, PA 19004
(610) 660-5585
Cezold@Ezoldlaw.com
www.ezoldlaw.com

posted by Christopher Ezold  |  May 25, 2010 12:13 PM [EST]

The answer to your question depends on what the two contracts actually say. There may be language in the new agreement that says it supercedes and nulifies all previous agreements. However, you also have to check the wording in the original agreement. Often, non-compete clauses have language that says, "this term supercedes and survives the termination of this agreement."

There may also be an issue of whether the company has given you sufficient consideration to sign the new agreement, although in your situation, you probably want the new agreement to be valid.

In the end, where there is some ambiguity in language, the court looks to the intent of the parties.

The bottom line is, you should have a legal professional examine both agreements in order to get an opinion that takes into account all possible factors.

posted by Mardi Harrison  |  May 25, 2010 11:08 AM [EST]