CA · SERVICE-AGMT · Updated July 2026 · Free
California Service Agreement
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California at a glance: Non-Compete Ban: Strictly Void (Cal. Bus. & Prof. Code § 16600) · Out-of-State Jurisdiction: Restricted under Section 925 · Late Fee Interest Cap: Subject to California usury laws (generally 10%)
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Overview
Service Agreements in California
California service agreements are subject to the California Civil Code and specific business regulations. Covenants not to compete are strictly void (Cal. Bus. & Prof. Code § 16600), and out-of-state forum selection clauses are generally restricted if they burden California residents (Cal. Lab. Code § 925).
Additionally, interest rates charged on late invoice payments are subject to California's usury limits unless exemptions apply.
Key Facts
California Service Agreement — Quick Reference
| Requirement | California Rule |
|---|---|
| Non-Compete Ban | Strictly Void (Cal. Bus. & Prof. Code § 16600) |
| Out-of-State Jurisdiction | Restricted under Section 925 |
| Late Fee Interest Cap | Subject to California usury laws (generally 10%) |
| Governing Law | California Civil Code |
Legal Requirements
California Legal Requirements
- Agreement cannot contain restrictive non-compete clauses targeting the service provider.
- Late fees or interest on unpaid invoices must not exceed statutory interest caps.
Governing Laws
California Governing Laws
Cal. Bus. & Prof. Code § 16600
Void Restrictive Covenants
Bans all non-compete clauses, rendering them entirely unenforceable.
Read the full text of these laws at Cornell Law School's California legal resources or your state legislature's official website.
Questions & Answers
California Service Agreement — Frequently Asked Questions
Can I charge late interest fees in California?
Yes, but the interest rate on consumer/unexempt transactions is generally capped at 10% per annum. Higher rates can be flagged as usurious.