Non-solicitation clause
A non-solicitation clause prevents a person from approaching a business’s customers, suppliers or employees for a defined period. It is narrower than a non-compete, because it restricts who someone may contact rather than whether they may work in the industry at all.
Because it restrains less, a non-solicitation covenant is generally easier to enforce than a full non-compete. Courts assess restrictive covenants against what is reasonably necessary to protect a legitimate interest, and a clause aimed squarely at the relationships a buyer paid for is a more proportionate answer than one barring a seller from the trade entirely.
Where the drafting matters
- Which customers are covered — everyone, or those the seller dealt with in a defined recent period
- Whether it captures accepting unsolicited approaches, or only actively soliciting
- Whether employees are covered as well as customers, and at what level
- Duration, which must be tied to how long the relationships realistically take to transfer
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentSelling a business
- 02Treadstone LawLegal commentaryHow Long Can a Seller's Non-Compete Last in an Ontario Business Sale?
- 03Treadstone LawLegal commentaryAre Non-Compete Clauses Enforceable Against Regulated Professionals Selling a Practice in Ontario?
- 04Treadstone LawLegal commentaryKey Employee Retention Agreements
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