Assignment of Noncompetition Agreements in Business Sales

April 27, 2007

A restrictive covenant or noncompetition clause contained in an employment agreement is not assignable to purchasing a business entity, in the absence of a specific assignability provision, where the covenant is included in a sale of assets. Hess v. Gebhard & Co., 570 Pa. 148, 808 A.2d 912 (2002). Business should carefully review the provisions of employment contracts and noncompete agreements to determine if the agreements are assignable to successor companies.