Affiliate Marketing Corporation
If company X signs a non-compete agreement saying its affiliates won’t compete, what if company X dissolves?
Hi,
Fact pattern: Joe owns a bunch of corporations, call them Company A~Company Z. Company X enters into a non-compete agreement with a foreign company called Acme Co., saying that Company X and its affiliates and subsidiaries won’t compete in Acme’s market. Company X is then dissolved.
Question: Does the non-compete agreement still bind Joe’s other companies (A~Z except X)? Even if not, is there any claim for Acme against Joe’s companies (I’m most interested in tort claims)?
Thank you very much!
Doesn’t it seem like Joe did something wrong though? If Acme has some trade secrets, he basically stole it and got rid of Company X so that Companies A-Z could use the trade secret. Isn’t there anything Acme could do?
Hopefully Acme will have better contract attorneys.
Company X is not able to enter into a contract that is binding for company A through whatever. Each company is a separate legal entity which is why Joe formed them. It is comparable to Joe signing a contract saying that his employee A will not compete even though employee A is not a party to the contract.
Each of Joe’s companies would have to enter into a legally binding contract agreeing to the non-compete.
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