Updated March 01, 2024
A Montana non-compete agreement prohibits a person from participating in the same industry for a period of time and geographical area. It is NOT permitted for employment purposes. Although, is legal for those who have sold a business (limiting the seller), partners in a dissolved partnership, and for general business agreements.
Laws
Legally Enforceable?
Yes, a non-compete is enforceable except for employment-related agreements.
For a non-compete to be enforceable, it must follow 3 essential rules:[1]
- Limited in time or place. The covenant should be limited in operation either as to time or place;
- Consideration. The covenant should be based on some good consideration; and
- Reaonsable. The covenant should afford a reasonable protection for and not impose an unreasonable burden upon the employer, the employee or the public.
Employment
A non-compete for employment purposes is not legally enforceable in Montana as described under law:
“Any contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind… is to that extent void.”[2]
Sale of a Business
A non-compete for the sale of a business is legal in the State of Montana. Although, it can only limit the seller from opening an identical business within the same or adjacent city or county where the principal office is located.[3]
Partnership Dissolution
A non-compete is legal for partners that are dissolving a partnership if they are all in agreement. The partners can decide to prohibit themselves from opening an identical business within the same or adjacent city or county of the principal office location of the dissolved entity.[4]
Maximum Term
12 months was considered reasonable.[5]
Blue Penciling
A Montana court is allowed to void portions of a contract that are deemed unlawful and keep others that are lawful by statute.[6]