Common use of Restrictions on Competition Clause in Contracts

Restrictions on Competition. Sometimes it is absolutely necessary for the owners to prohibit one another from competing with the business, while other times it is not appropriate at all. A good agreement finds the right balance. Buy-Sell Issues An agreement among the owners of a business must establish the consequences not only if an owner dies, but also if he or she becomes disabled, is divorced, becomes insolvent, or simply withdraws. Many options are available, from purchasing the departed owner's interest for cash, to funding a post-death purchase with life insurance, to converting the interest of the departed owner to a non-voting interest and leaving it in the hands of a successor.