A buyer says you broke your non-compete. Or the earnout checks you counted on have stopped. When a former owner starts competing after a business sale, the signed sale agreement is usually where the answer begins. In Florida, a non-compete breach in a business sale also depends on the business interest the restriction protects and whether its terms are reasonable. This page explains those rules in plain terms and shows how these disputes usually move forward.
When a Business Sale Turns Into a Covenant or Earnout Dispute
A sale becomes a dispute when one side believes the other broke a promise in the deal documents. The two most common promises are restrictive covenants and earnouts. A restrictive covenant is a promise not to compete, not to solicit customers or employees, or not to use confidential information after closing. An earnout is part of the purchase price paid later, usually based on revenue or another measure of performance.
This page is for selling owners, buyers, minority owners, and partners whose deal terms are now in question. It also helps family members or business partners who are looking into a matter for someone else.
Disputes often follow a familiar pattern. The seller opens a competing shop nearby. A former owner calls customers who now deal with the buyer. Or the earnout payments shrink or stop without a clear reason.
The purchase agreement usually decides these cases. Its covenant wording, earnout definitions, and notice terms matter more than general rules. Timing matters too. Closing dates and earnout measurement periods can shape what each side can do next.
If a buyer has accused you of breaking a non-compete, or your earnout payments have stopped, our team can review your situation with you. Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.
How Florida Law Treats Non-Competes and Non-Solicits in a Sale
Florida courts will not enforce a covenant unless it is in a writing signed by the person bound by it. The covenant must also be reasonable in time, area, and line of business. The main statute is Florida Statutes § 542.335. Whether a covenant holds up depends on the facts of each deal.
The party seeking enforcement must plead and prove a legitimate business interest. The statute lists trade secrets and valuable confidential business information as examples. A covenant with no such interest is void and unenforceable.
The buyer must also show the restraint is reasonably necessary to protect that interest. If the restraint is overbroad or overlong, the court must modify it. The court then grants only the relief that is reasonably necessary.
Sale covenants are analyzed differently from employee covenants. The statute sets its own time presumptions for covenants with former employees, agents, or contractors that are not tied to a sale. In a sale, the buyer paid for the business, and that context matters.
Enforcement can move quickly. Violating an enforceable covenant creates a presumption of irreparable injury. A court can issue temporary and permanent injunctions, but no temporary injunction is entered without a proper bond.
Florida law and the contract remain the main framework.
What an Earnout Breach Looks Like
An earnout breach happens when the buyer does not pay the earnout the contract requires, or pays less than it should. Common patterns include:
- Changing operations in a way that lowers the measured number, such as cutting staff or shifting prices.
- Moving revenue to another company or location.
- Withholding reports or records the contract requires.
- Paying late or skipping a payment.
A seller usually needs to tie the complaint to a specific earnout term.
A promise of future payment can also raise fraud. Florida’s Third District has said a promise of future action can be fraudulent if the promisor had no intention of performing when making it. See Frutafino, S.A.S. v. Dole Chile.
The documents that usually decide these disputes are the purchase agreement, the earnout definitions, the accounting principles, the dispute and arbitration clauses, and the notice requirements. Keep your own financial records, emails, texts, and notes about how the business ran during the earnout period.
What Our Business Litigation Team Handles in These Disputes
Our team handles covenant enforcement and defense, earnout claims, and related contract disputes in Florida courts and arbitration.
- Enforcing non-compete and non-solicit covenants against a former owner, including demand letters and complaints.
- Defending covenant claims, including challenges to a covenant’s scope, length, or territory.
- Earnout disputes, including payment demands, accounting challenges, and breach of purchase agreement claims.
- Temporary injunction requests to stop ongoing competition or solicitation while a case moves forward.
- Disputes that the deal documents send to arbitration.
When a former owner takes customers, the business may have a claim for interfering with those relationships. Florida requires an actual and identifiable understanding or agreement that in all probability would have been completed without the interference. A general relationship with the community does not count. See Ozyesilpinar v. Reach PLC.
How These Disputes Typically Proceed
Most of these disputes start with a document review and a written demand. They move to court or arbitration only if talks stall.
- Review. Read the purchase agreement, covenants, earnout terms, and related agreements. Build a timeline of key events.
- Demand or response. A clear written demand can resolve the issue or narrow it.
- Filing. If talks fail, the claim goes to court or to the arbitration forum the contract names.
- Discovery. In earnout cases, this often focuses on financial records and accounting methods.
- Resolution. Depending on the forum, the case ends in mediation, settlement, trial, or an arbitration award.
Florida law says a written agreement to arbitrate is valid and enforceable, except on grounds that exist to revoke any contract. See Florida Statutes § 682.02. Courts decide whether an arbitration agreement exists.
On a party’s request, a court must refer filed damages cases to mediation, provided the requesting party is willing and able to pay the mediation costs or the costs can be equitably divided between the parties. Fla. Stat. § 44.102 reads: “(2) A court, under rules adopted by the Supreme Court: (a) Must, upon request of one party, refer to mediation any filed civil action for monetary damages, provided the requesting party is willing and able to pay the costs of the mediation or the costs can be equitably divided between the parties, unless: 1.” Exceptions apply, including an agreement to binding arbitration. See Florida Statutes § 44.102.
Deadlines matter. A contract clause that sets a shorter time to sue than the statute allows is void. See Florida Statutes § 95.03. Waiting can also cost you options. Under Flaherty v. Flaherty, a party can lose the right to undo a voidable contract by failing to act after learning the key facts.
Florida generally follows the rule that each side pays its own attorneys’ fees, unless a contract or statute says otherwise. See Price v. Tyler. Under § 57.105, if a contract contains a provision allowing attorney’s fees to a party when that party is required to take action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract. This subsection applies to any contract entered into on or after October 1, 1988. Timelines vary with the forum, the facts, and court schedules.
Why Work With Ayala Law PA on a Covenant or Earnout Dispute
Ayala Law PA focuses on business litigation, commercial litigation, contract disputes, shareholder disputes, construction litigation, real estate litigation, and international trade litigation.
Eduardo A. Maura is the responsible attorney for this page. Our team represents businesses and entrepreneurs in commercial, contract, and construction matters involving clients in Hillsborough County, Brandon, Riverview, Plant City, Temple Terrace, and the wider Tampa Bay area.
Our office is at 1646 W Snow Ave in Tampa, Florida.
Our approach is practical. We start with a careful document review, explain your options in plain language, and watch deadlines closely.
If your matter fits better with another lawyer or firm, we will say so, and it may be referred.
Not sure what your next step is?
Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.
Common Questions Before You Act
Most questions in these disputes come down to the signed contract and the facts behind it.
Can a seller compete after closing if the agreement is silent?
A silent agreement leaves questions open. The full contract and the surrounding facts need review.
What if the buyer stopped paying the earnout?
Options can include a written demand, the dispute steps in the contract, or a court or arbitration claim.
Timing and conduct on both sides matter.
Who pays attorneys’ fees in these cases?
Each side usually pays its own fees unless a contract or statute provides otherwise.
How long does a case take?
It varies with the forum, the complexity, and the court’s schedule.
Talk Through Your Situation With Our Team
If a buyer has accused you of breaking a non-compete, or an earnout payment has stopped, you don’t have to sort out the contract alone. Before you reach out, gather the purchase agreement, the covenant language, the earnout schedule, and recent emails or letters. Then call (305) 570-2208 or use our contact page to arrange a case evaluation.
