Do I Have to Worry About A Non-Compete When Dissolving My NY or NJ Business?
If you are a shareholder, partner or member of a New York or New Jersey business then the answer is "yes". Of course much will depend on the circumstances and the reason that you are dissolving your business. If you and your business partners have agreed to dissolve the business and each person just "move on" then chances are that there may be no big non-compete issues. However, if you or a partner is approaching "dissolution" in response to a business dispute then there may be significant issue. Consider that for business partners "non-compete" obligations arise both "contractually" (by the terms of your shareholder, partner or member agreement - if you have one) and "legally" as a result of the fiduciary duties and obligations imposed on partners under New York and New Jersey law. Although further evaluation will be required, you should assume that a partner cannot just dissolve a business and then go on to establish a competing business. This issue comes up often in a variety of businesses, including distributors, retailers and professional service organizations involving accountants, brokers and consultants.
To learn more about non-compete agreements, read "Can a Non-Compete Agreement Be Enforceable Against You In New York and New Jersey".
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