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North Carolina Business Disputes

Hannah Sheridan Loughridge & Cochran attorneys assist our clients resolving business disputes efficiently and effectively. We have experience negotiating and litigating matters throughout North Carolina. The fact is, business disputes generate apprehension and frustration, and they subtract from the bottom line of your business. HSLC understands the concerns that businesses face, and we attempt to forestall expensive and time-consuming litigation when that approach is consistent with the clients’ goals. Protecting your rights, your best interests, and your bottom line are our driving concerns at every stage.

Our firm is attentive to the needs and objectives of each client. We provide representation in areas of business disputes including contract related disputes, employee-related contracts, non-compete agreements, disputes between business partners or shareholders in areas including profit-sharing disputes, alleged fiduciary duty breaches, and business divorces, disputes that arise between two or more businesses, and disputes arising out of business and asset purchases.

New businesses can benefit greatly from sound legal advice and foresight often avoids liability in business disputes down the road. Starting a new business involves consideration of what type of business entity to organize, and each choice has consequences including tax implications and liability issues. Your choice of a business entity, as well as how the organizing documents are drafted, can significantly affect your profitability and exposure to liability. The attorneys at HSLC can give you guidance and necessary advice based upon years of legal and business experience.

HSLC’s experience in representing clients involved in business disputes encompasses: Partnerships, Joint Venture, LLC and LLP Disputes; Non-Compete Agreements; Non-Disclosure and Non-Solicitation Agreements; Breach of Contract; Breach of Warranty; Fraud Claims; Unfair & Deceptive Practices; Purchase & Sale Contracts; Property Disputes; Intentional Interference With Prospective Business Opportunities.

Frequently Asked Questions

1.  Are Non-Competition Agreements upheld in North Carolina?

Yes. The better question is “How restrictive can a non-compete agreement be and still be enforceable?” When a court considers the enforceability of a covenant not to compete, the judge examines whether there was consideration underlying the agreement. A judge will look to the reasonableness of its time and geographic restrictions, balancing the employee’s right to work against the legitimate business interests of the employer. In general, while the courts disfavor non-compete agreements and won’t black line an agreement, if it meets the test the court will enforce it.

While the analysis creates a case by case result, the general rule is that for enforceability of a non-compete agreement in  North Carolina, the agreement must be 1) in writing; 2) part of an employment contract; 3) based on valuable consideration; 4) be reasonable as to time and territory; and 5) be designed to protect the employer’s legitimate business interests.  Bottom line; it must be reasonable.

2.  What factors does a court consider when analyzing “geographic limits” of a non-compete agreement?

To prove the reasonableness of a geographic restriction, the employer must show where its customers are located and that the geographic restriction is necessary to maintain and protect those customer relationships. The employer must also show that the territory embraced by the covenant is no more than necessary to secure the protection of its business or good will. Factors include the area or scope of restriction, the area assigned to the employee, the area where the employee actually worked or was subject to work, the area in which the employer operated, the nature of the business involved, and the nature of the employee’s duty and his knowledge of the employer’s business operation.

3.  How does a non-solicitation agreement differ from a non-compete agreement?

 A non-solicitation agreement restricts the actions of an employee after they cease working for an employer. This type of agreement prohibits a prior employee from contacting customers of the employer for a certain period after termination. Like non-compete agreements, non-solicitation agreements should be drafted very carefully and they should be tailored to the specific nuances of the trade or industry, in order to be enforced. Generally, the agreement should identify the time period during which the solicitation ban is in effect and it needs to describe and identify with particularity the customers, or class of customers, that the employee is prohibited from contacting. A well-drafted non-solicitation agreement also has terms which prevent avoidance techniques, such as passing along the information to third parties.