Q: Hi, we had distribution agreement with a Pennsylvania manufacturer for 16 years, and then the manufacturer terminated
the agreement without prior notice and the agreement says that we may not compete with them for 2 years after termination. Is this legal?
A: The non-compete part of the agreement may not be enforceable. The contract for this engagement would have to be reviewed very carefully as to the terms related to termination. The enforcement of any non-compete clause is generally scrutinized for reasonableness. Most courts are reluctant to enforce such a long-term non-compete, but a lawyer would have to review the whole contract. There may or may not have been a geographic area (as a limit) described in that paragraph regarding non-competition after termination. You should have an attorney review your distribution agreement to know what your rights are going forward.
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