North Dakota Non-Compete Agreement | Laws

Create a high quality document online now!

Updated June 02, 2022

A North Dakota non-compete agreement prohibits the seller of a business from being able to open or work in the same industry. The restriction must be for a specific time period and geographical area.

Employment non-competes are strictly forbidden in accordance with State law (§ 9-08-06).

Legally Enforceable?

  • Employment: No, an individual acting as an employee is prohibited from entering into a non-compete. (§ 9-08-06)
  • Sale of a Business: Yes, the seller of a business may be held to the terms of the non-compete by the buyer. (§ 9-08-06(1))
  • Shareholders and Partners: Yes, upon the dissolution of a business entity, the owners may agree to a non-compete after it’s dissolved. (§ 9-08-06(2))

Can Employers choose another State as the Governing Law?

No, if the employee is working in North Dakota, the employment restriction will be viewed under State law. An employer cannot use another State as the governing law in a non-compete agreement to get around North Dakota law.

Source: Osborne v. Brown & Saenger, Inc. (2017)

Geographical Area

When selling a business, the North Dakota Supreme Court has ruled the geographical area must be a county, city, or village (see below).

“One who sells the good will of a business may agree with the buyer to refrain from carrying on a similar business within a specified county, city or village, or a part of either, so long as the buyer or any person deriving title to the good will from him carries on a like business therein.”

Source: Mandan-Bismarck Livestock Auction v. Kist (1957)

Maximum Term

10 years was deemed reasonable by the North Dakota Supreme Court.

Source: Mandan-Bismarck Livestock Auction v. Kist (1957)

Blue Penciling

The North Dakota statutes allow a court to modify an  agreement to be enforceable.

Source: § 9-08-06(1), Earthworks, Inc. v. Sehn (1996)