Ohio Court Allows Significantly Longer Restrictions in Sale of Business Non-Competition Agreement

Posted: Thursday, November 13, 2008

By: Joshua C. Dickinson

Topic: Non-Compete Cases

In CBIZ et al v. Urban, (publication pending) (2008 Ohio 5774), the Ohio Court of Appeals held that non-compete/non-solicitation provisions of significant duration were enforceable in the context of the sale of a business.  In CBIZ, t he trial court enforced the restrictive covenants with slight modifications. The Ohio Court of Appeals affirmed and held that non-compete and non-solicitation agreements associated with the sale of a business should be afforded less scrutiny than ones entered into by employees as consideration for employment. The court found no abuse of discretion in enforcing the thirteen-year term for the non-compete agreement and the eighteen-year term for the non-solicitation agreement. The Dissent would have applied a five-year term and the ten-year term, respectively.

    Ohio, like many states, will generally defer to parties' freedom to contract when it relates to restrictive convenants on former company owners and executives when such agreements were executed in conjunction with the bulk sale of a business or its assets.