Proposed restrictions on non-competes fall short
Dear Editor:
Your proposed restrictions on non-compete agreements in Massachusetts (Editorial, June 9) are inadequate. For example, there is a very real and serious threat to business buyers that I call “a boomerang seller.”
As a business attorney, I have experienced this issue with specialized businesses in narrow industry segments that warrant attention. In one, the seller waited out the non-competition period in the purchase-and-sale agreement and re-entered the industry after having sold to the buyer so he could “retire.” As soon as the non-compete expired, he “un-retired,” returned to the industry and has competed fiercely with the buyer for several years.
If non-competition agreements are banned in Massachusetts, here's a possible remedy for such a situation: Have the parties in a sale enter into a “Liquidated Damages Agreement” that would allow a seller to re-enter the business, but impose substantial damages for undermining the terms of the agreement. How else can a buyer protect himself from a boomerang seller if non-competition agreements are banned?
~ Jeffrey K. Schaffer, Westborough
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