In Specialized Property Evaluation Control Services Ltd v Les Evalauations MarcBbourret Appraisals Inc and Ross Huartt ( 2016 ABQB 85) the Court was faced with a non-solictation clause which prohibited the Defendant from doing business with any customer of the Plaintiff for a period of 6 months from the date of termination of employment.
The Court found that this provision was too broad because it forbade the ex-employee from soliciting the Plaintiffs’ customers for any business at all, not just from solicting them for business competative with the business of the Plaintiff.
For example, if the employer is in the business of providing forensic accounting services to law firms, and in particular the ASBC Law Firm , this prohibition would purport to prevent the ex-employee from selling office supplies to the ABCS Law Firm.
On this basis alone the judge found that the non-solicitation clause was unenforceable.
The better practice is to:
a) Restrict the solicitation of customers only to the same business as the Employer’s, in other words, you cannot go after the ABCS Law Firm for the provision of forensic accounting services.
b) Define the term ” customer ” in some fashion in a temporal sense. A common definition is ” any customer who has purchased goods from us in the 12 months prior to the date in which you left employment”
c) Define “customer” to include only those customers with which whom the employee has had contact. This is especially true in a large organization that may have thousands of clients.
One should realize however that a strategy of counsel for ex-employees faced with a cease and desist letter or a lawsuit from the ex-employer is to request that the ex-employer provide a complete list of those customers that they consider covered by the non-solicitation clause to insure that their client does not inadvertently violate the agreement. Most employers are quite reluctant to give out such a list, especially to an competing ex-employee and his or her new employer. If they refuse to provide such a list, it might be difficult later on to allege a breach of the clause as the employee could rightly claim that he or she was not sure who was on this list and who was not.
1,696 thoughts on “Not Limiting Customers = Unenforceable Non-Solicitaion Clause”