Make a North Dakota Non-Compete Agreement

Applicable State Laws - § 9-08-06 

North Dakota will enforce non-compete agreements as long as the agreements are fair and not excessive in their restrictions. Geographic area clauses must be incredibly specific and list cities, counties, or neighborhoods. The state also recommends that both parties have enough time to read and understand the agreement before being required to sign.

However, North Dakota does not allow for non-compete clauses or non-solicitation clauses to be included in a contract for the sale of a business or if the partners want to dissolve their partnership. This was decided in the North Dakota Supreme Court case known as Brown & Saenger, Inc.

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

How to Write a North Dakota Non-Compete Agreement

To write a North Dakota non-compete agreement, first review state law. Include the following clauses, but remember to keep them reasonable in scope:

• Purpose. This clause explains why the non-compete exists: to protect legitimate business interests. It identifies the parties and their roles and lists the effective date. This clause may also state that the terms "confidential information" and "proprietary information" may be used interchangeably.
• Non-compete. This clause explains the restrictions the signing party is obligated to uphold. It includes restrictions on time, geographic area, reasonable restraints of trade (such as not working for competitors or working in certain industries), and non-solicitation of customers, clients, or employees.
• Time period. This clause explains when the time period restriction begins, either at the beginning of the employment relationship or when it terminates.
• Purchase option. This clause states whether or not your business will allow the employee or independent contractor to buy out the contract so that they are released from their obligations. If so, this clause lists the amount that must be paid.
• Jurisdiction. This clause explains that North Dakota law will be used in the event that a lawsuit must be filed or to settle any disagreement that may arise over the agreement.
• Confidential information. This clause defines "confidential information" as any and all technical or 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 products, experimental products, software, databases, customer lists, vendor lists, supplier lists, marketing information, reports, business plans, financial information, or other information about your business or any of your customers, clients, or consultants that is made available to the other party under the terms of the non-compete agreement.
• Permitted disclosure. This clause explains when it is acceptable for confidential information to be released. Examples include when your business provides written consent to release specific information to the public, when information is made public through no fault of the signing party, and when the signing party discovers certain information on their own without another party committing a breach.
• Confidentiality. This clause states that the signing party agrees that the information they may access is confidential. They agree they will not directly or indirectly communicate it to another party without obtaining written consent from your business. They also agree that they will not use the information for any purpose other than to improve the financial health of the business unless they receive written consent from your business.
• Consultants and employees bound. This clause explains that the agreement binds both consultants and employees to keep the information they may access in the strictest of confidence. It also states that both consultants and employees are on a need-to-know basis when it comes to receiving information.
• Return of information. This clause states that either when the relationship is terminated or when requested by your business, the signing party must return all documents and other tangible materials that represent the confidential information of the business as well as any copies that exist. The clause also states that the business will notify the signing party of any unauthorized disclosure of confidential information.
• Remedies. This clause explains the legal remedies your business may be entitled to pursue if the signing party breaches the non-compete agreement. Examples 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, etc., as well as all other remedies available under North Dakota law or as a matter of equity.
• Choice of law. This clause states that the parties choose the laws of North Dakota to govern the agreement and any arising disputes.
• Entire agreement. This is the last clause of the non-compete agreement. It states that the entire agreement may be amended in writing if the parties sign the amendment.

The parties must sign and print their names. The signatures should be dated. Each party should keep a copy of the executed contract for their records.