Make a Montana Non-Compete Agreement

Applicable State Laws - Sections 28-2-703, 28-2-704, and 28-2-705 of the Montana state law 

Montana enforces non-compete agreements but also restricts them. For example, non-compete agreements are often included in the sale of a business. Montana states that non-compete agreements may be enforced in the sale of a business or company if:

1. The buyer carries on a similar business, and;
2. A similar business conducts business in the same city or county or adjacent county.

However, these agreements may not create an unreasonable burden on the former employee.

Additionally, the Montana Supreme Court held that non-competition agreements will not be enforced when former employees are terminated by their former employer without cause. Wrigg v. Junkermier, Clark, Campanella, Stevens, P.C., Case No. DA 11-0147, 2011 MT 290 (Nov. 22, 2011). In this case, Ms. Wrigg, a certified public accountant, worked for JCCS as a staff accountant. She was eventually promoted to a shareholder and signed several two-year employment agreements that included a monetary penalty if employment was terminated within 12 months and she worked for a competitor for any reason. JCCS terminated her contract and ultimately attempted to penalize her because she went to work for another accounting firm. Eventually, the Montana Supreme Court held if an employee is terminated without cause and the former employee does not misappropriate trade secrets, the non-compete is likely unenforceable. The court ruling is supported by decisions in Iowa, New York, Pennsylvania, Tennessee, and the Seventh Circuit Court of Appeals (which interpreted Illinois law).

Protect your Montana business by also using a Montana non-disclosure agreement form. Download a Montana non-disclosure agreement form now!

How to Write a Montana Non-Compete Agreement

To write a Montana non-compete agreement, first review Montana law. Include the following clauses:

• Purpose. This clause is used to explain the purpose of the agreement: to protect the confidential information of the business. It may also identify the parties and their roles as well as provide the effective date. It may also state that the contract may use the terms "confidential information" and "proprietary information" interchangeably.
• Non-compete. This clause explains the restrictions on time and geographical area, general and specific business practices and activities, restrictions on working for general or specific competitors, non-solicitation of clients and customers, and non-solicitation of employees.
• Time period. This clause may restate the time period listed in the non-compete clause. It also explains when the time period begins, either at the beginning of the employment relationship or when it terminates.
• Purchase option. This clause explains whether the signing party has the ability to buy their way out of the contract. If so, the specific amount they must pay is listed in this clause.
• Jurisdiction. This clause states that Montana law governs the agreement.
• Confidential information. This clause states that the term"confidential information" as it is used throughout the non-compete agreement means any and all technical and non-technical information provided by your business that includes, and is not limited to, any data or other proprietary information related to products, inventions, plans, methods, processes, developmental or experimental products, intellectual property, software, databases, customer lists, vendor or supplier lists, marketing methods, reports, business plans, financial information, or other matter regarding your business or any of your customers, clients, consultants, or licensees that is disclosed to the signing party under the terms of the non-compete agreement.
• Permitted disclosure. This clause explains when information that is generally considered confidential is no longer considered confidential. Usually, this happens when that information becomes public through no fault of the signing party, when the signing party learns something on their own without a breach of another party, or when your business provides written consent to release specific information to the public.
• Confidentiality. This clause states the signing party recognizes the information they may access is confidential and they agree they will not directly or indirectly disclose it to another party without receiving written consent from the business. They also agree they will not use the information for any other purpose except to further the business without first obtaining the written consent of the business.
• Consultants and employees bound. This clause states that both consultants and employees are bound to keep the information they receive in the strictest of confidence. It also states that they are on a need-to-know basis for the information.
• Return of materials. This clause states that when the non-compete agreement is terminated or when requested by the business, the signing party is required to promptly return all documents and other tangible material representing the confidential information of the business as well as any copies that exist. It also states that the business will notify them of the discovery of any unauthorized disclosure of confidential information.
• Remedies. This clause explains the remedies that your business is entitled to pursue under Montana law if the signing party breaches its obligations. Examples may include the recovery of court costs and reasonable attorney fees, the award by a court of a temporary restraining order or preliminary injunction against the unauthorized use of the information, as well as any other remedies available under Montana law or as a matter of equity.
• Choice of law. This clause states that the parties agree to choose Montana law to govern the agreement.
• Entire agreement. This clause states that the entire agreement may be amended in writing. However, for the amendment to be valid, the parties must sign the amendment.

The parties must sign and print their names. The signatures of the parties must be dated. Finally, the parties should each receive a copy of the executed agreement for their records.