Non-Solicitation Clause
Contractual commitment by which the seller agrees not to solicit the sold business's employees or customers for a defined period after closing.
Definition
The non-solicitation clause is a commitment included in the purchase and sale agreement that prevents the seller from actively soliciting the business’s employees or customers after the sale. Its duration is typically two to five years. This clause is distinct from the non-compete clause, which prohibits the seller from carrying on competing activities within a defined territory.
In French-language Quebec documentation, you’ll see clause de non-sollicitation used for the same concept.
Under Quebec and Canadian law, a non-solicitation clause must be reasonable in duration, scope, and territory to be valid and enforceable by the courts.
Why the non-solicitation clause matters in a business sale
As a seller, you need to understand that this clause protects the buyer’s investment. When a buyer pays a price that reflects the value of your customer base and your team, they expect you won’t try to win those assets back after the transaction. It’s a reasonable ask, and its absence would raise legitimate concerns.
That said, the scope of the clause deserves close attention. A clause that’s too broad — preventing you from contacting anyone who ever did business with the company, or covering employees you never supervised — can unfairly limit your future professional activities. Your lawyer needs to make sure the clause is proportionate to the transaction.
In practice, the non-solicitation clause is rarely a major obstacle in negotiations. Most Quebec SME sellers have no intention of soliciting their former employees or customers. That said, if you plan to start a new business in a related sector after the sale, the precise drafting of this clause becomes critical.
What every seller should know
- Separate “non-solicitation” from “non-compete”: you can agree not to solicit your former customers without also banning yourself from any activity in your sector. The two clauses are negotiated separately.
- Negotiate the definition of “solicitation”: receiving a call from a former customer who reaches out on their own isn’t generally considered solicitation. Make sure the clause says so.
- The standard duration in Quebec is two to three years for SMEs. Beyond five years, courts may find the clause excessive and reduce or invalidate it.
- If you’re staying with the business for a transition period, clarify when the clause starts: it should begin at the end of your transition period, not at the closing date.