A broad contractual restriction preventing someone from carrying on a lawful profession, trade or business is generally void under section 517 of the Civil Code, subject to statutory exceptions.[2]
One express exception concerns the sale of business goodwill, where the seller can agree not to conduct a similar business within the contractually specified period and area.
Drafting caution
A non-compete clause should not be assumed enforceable merely because both parties signed it. Its purpose, scope and statutory basis need separate review.
Sources
- Nepal Law Commission, **National Civil Code, 2074 — Chapter 3: Validity of Contracts**, ss. 517–520. View source