A balanced, mutual starting point that reflects the market postures above.
During the Term and for [12] months after it ends, Supplier shall not, within [defined territory], provide [defined restricted services] to [defined customer class], except that this Section does not restrict Supplier from: (a) continuing to serve any customer Supplier served before the Effective Date; (b) providing services unrelated to [defined restricted services]; or (c) responding to a general solicitation not directed at [defined customer class].
The parties acknowledge that this Section protects Customer's [confidential information / customer relationships / relationship-specific investment], and that its duration, territory and scope of restricted activity are limited to what is reasonably necessary to protect that interest. If a court finds any part of this Section unenforceable, the parties intend the court to enforce it to the maximum extent permitted by applicable law.
Every bracket above is a decision that decides enforceability. Leave one blank and a court has nothing to narrow. The carve-outs matter more than the restraint itself, and the two that get litigated are pre-existing customers and general solicitation. The final sentence only does work in states whose courts reform an overbroad restraint, so check the governing state before relying on it.
Paste your clause. You get a score and a flag on each thing worth fixing. We analyze it, we do not store it.
No public dataset measures how often non-compete clauses appear in commercial contracts between businesses, or what those clauses contain. None reports duration, territory or restricted-activity scope in any population. Pages that publish a standard term or a standard radius are not citing a study, because no qualifying study exists. So this section reports worker-incidence surveys and the legal record instead, and each figure states its own denominator.
Non-compete is three clauses sharing a name. Employment restraints bind an employer and a worker, and all the survey data below describes that population only. Sale-of-business restraints bind a seller or founder. Commercial restraints between businesses are the population this library is about, and nobody has measured them.
The clause was drafted for the wrong population. A restraint written as an employment non-compete, dropped into a supply agreement, gets tested as an employment restraint in states whose statutes turn on the worker relationship. The transaction it is ancillary to decides the standard, so the clause has to name it.
Nobody checked the governing state before signing. Non-compete law is state law, it is not uniform, and it moved in at least eight states between 2025 and 2026. California, Minnesota, North Dakota and Oklahoma void most employment restraints, Wyoming joined them in July 2025, and Washington's near-total ban takes effect in June 2027. The same words are routine in one state and void in the next.
The reformation sentence does nothing. Drafters add "to the maximum extent permitted by law" and treat overbreadth as free. In states whose courts delete but do not rewrite, only grammatically severable words come out, so the drafter gets a step-down only if they wrote the narrower alternatives into the clause themselves. In states whose courts refuse to save an overbroad restraint, it fails entirely. The clause cannot fix this on its own either: North Carolina's Supreme Court held in Beverage Systems v. Associated Beverage Repair (2016) that "parties cannot contract to give a court power that it does not have," and South Carolina held in Poynter Investments (2010) that a restriction cannot be rewritten by a court or limited by the parties' agreement.
The restraint outran the interest. A clause protecting a customer list that turns over every year does not need three years and a national territory. Courts narrow or void restraints that reach past the interest the party actually has, and the clause that asks for too much can end up enforcing less than a modest one would have.
The parties assumed the sale-of-business carve-out applies. Statutes that except sale-of-business restraints define the exception by ownership percentage, transfer of goodwill, seller status and whether the restraint is ancillary to a genuine transaction. A founder who keeps working after the sale can be inside the employment ban and outside the sale exception at the same time.
Nobody priced the related restraints. Confidentiality, customer non-solicit and employee no-hire are separate clauses with separate fates, and Minnesota's statute expressly excludes the first two from its definition of a covenant not to compete. Dropping the non-compete and keeping the narrower restraints often protects the same interest in more states, and nobody runs that trade because the non-compete is the one on the template.
A non-compete clause stops one party from competing with the other for a set time, in a set area, in set activities. In employment it restricts a worker after they leave. In a sale it stops the seller from rebuilding the business they just sold. In a commercial agreement it stops a supplier, distributor or partner from serving a defined set of customers. The three are tested under different standards, so the clause should say which one it is.
It depends on the state and on the kind of restraint. Courts generally ask whether the restraint protects a real interest, such as confidential information, customer relationships or purchased goodwill, and whether its duration, territory and scope go no further than that interest needs. California, Minnesota, North Dakota and Oklahoma void most employment non-competes outright, and Wyoming joined them for contracts entered on or after 1 July 2025, though all five still allow restraints tied to the sale of a business. The federal rule that would have banned most employment non-competes never took effect.
No public dataset reports a market duration for employment, sale-of-business or commercial non-competes, so anyone quoting a standard term is not citing a study. What governs is the state. Some states cap or presume a period by statute, Florida's CHOICE Act allows covered restraints up to four years, and elsewhere a court asks how long the protected interest stays valuable. A term borrowed from another agreement with no reason behind it is the version most likely to fail.
No. The FTC issued a rule in 2024 that would have banned most employment non-competes, but a federal court set it aside on 20 August 2024 before it took effect. The Commission voted 3 to 1 on 5 September 2025 to accept that outcome and drop its appeals, and removed 16 CFR Part 910 from the Code of Federal Regulations on 12 February 2026. The agency still challenges individual employers' non-competes case by case under Section 5 of the FTC Act, including an April 2026 action covering more than 18,000 employees.
The routes are narrow and state-specific. A restraint can fail because it protects no legitimate interest, because its duration, territory or activity scope reaches past that interest, because the state voids it by statute, or because the employer breached first. Virginia made a non-compete unenforceable from 1 July 2026 against an employee discharged without cause and paid no severance, and other states have taken similar steps. None of this is self-executing, so read the clause against the governing state's law before acting on it.
A workable one names four things: how long the restraint runs, where it applies, what activity it restricts, and what interest it protects. It also names its carve-outs, such as customers served before the restraint began and responses to a general solicitation not directed at the protected group. The sample clause above shows the commercial version with every one of those decisions left as a bracket, because filling them in is what decides whether the clause survives.
Sale-of-business restraints are the most enforceable kind. Statutes that void employment non-competes routinely except restraints tied to the sale of a business, an ownership interest, or the goodwill of a practice, and the FTC's own rule carried the same exception before it was removed. The exception turns on details: ownership percentage, whether goodwill actually transferred, seller status, and whether the restraint is ancillary to a genuine transaction. A founder who stays on after the sale can fall inside the employment rules and outside the sale exception at the same time.
A non-compete stops the party from competing at all within its terms. A non-solicit stops them from approaching named customers or employees while leaving them free to compete otherwise. Non-solicits survive in more states, and Minnesota's statute expressly excludes them, along with nondisclosure agreements, from its definition of a covenant not to compete. Dropping the non-compete and keeping the narrower restraint often protects the same interest with less risk. They are separate clauses with separate fates, and a non-solicit drafted broadly enough can be treated as a non-compete anyway.
Four void most employment non-competes outright: California, Minnesota, North Dakota and Oklahoma. Wyoming joined them for contracts entered on or after 1 July 2025. All five still allow restraints tied to the sale of a business. Montana is often listed alongside them and does not belong there, because its courts apply a reasonableness test rather than a ban, though it does ban non-competes for health care providers. Beyond those, restrictions are spreading fast: Washington enacted a near-total ban effective 30 June 2027, and 101 bills were pending across 34 states in March 2026. Check the governing state as of today rather than relying on any chart, including this one.
Aline drafts and redlines against your own approved clause library, so every contract starts from language you already trust. Draft, redline, and query agreements 10x faster with AI.
More from Aline on drafting, negotiating, and managing commercial contracts.
