Non-solicitation of customers: Overview, definition, and example
What is non-solicitation of customers?
Non-solicitation of customers is a contractual provision that prohibits an individual or business from actively reaching out to or attempting to do business with a company’s existing clients or customers for a specified period after leaving a job or ending a business relationship. This clause is commonly included in employment contracts, partnership agreements, and business sales to protect a company’s customer base.
For example, a sales executive leaving a company may be restricted from contacting or soliciting the company’s clients for a year after resignation to prevent them from taking business away.
Why is non-solicitation of customers important?
A non-solicitation of customers clause is important because it protects a business’s client relationships and prevents former employees, partners, or contractors from using inside knowledge to compete unfairly. Without such a clause, an employee could resign, start a competing business, and immediately poach existing customers, causing financial harm to the former employer.
For businesses, including this clause in contracts helps maintain customer loyalty, safeguard proprietary client information, and reduce the risk of unfair competition.
Understanding non-solicitation of customers through an example
Imagine a marketing agency hires a senior consultant who works closely with several high-value clients. When the consultant resigns and starts their own agency, the employment contract’s non-solicitation of customers clause prevents them from contacting or offering services to their former employer’s clients for two years. This protects the agency’s revenue and customer relationships.
In another scenario, a tech company acquires a smaller startup. As part of the business acquisition agreement, the startup’s founders agree to a non-solicitation clause, preventing them from approaching former customers for a period of time after the sale, ensuring the acquiring company retains those customers.
Example of a non-solicitation of customers clause
Here's how a non-solicitation of customers clause may look like in a contract:
"For a period of [X] months following the termination of employment or business relationship, the Restricted Party shall not, directly or indirectly, solicit, contact, or attempt to do business with any customers or clients of the Company with whom they had a business relationship during the last [X] months of engagement."
Conclusion
A non-solicitation of customers clause protects a business’s existing client base by restricting former employees, partners, or business sellers from actively soliciting customers. By including this clause in contracts, businesses can prevent unfair competition, maintain customer relationships, and protect revenue streams.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.