| Author: | Alasdair Taylor |
| Updated: | 11 May 2023 |
| Length: | 5 pages (min.) |
| Notes: | 7 pages (min.) |
| Format: | MS Word (.DOCX) |
This is a non-solicitation agreement template. The purpose of a non-solicitation agreement is to prevent one or both parties from interfering in the business relationships of the other.
In the unilateral version of this document, the restrictions are placed on one party only; in the mutual version, they are placed on both parties.
Non-solicitation restrictions
There is a wide selection of optional and alternative restrictions in the agreement. These include prohibitions on:
- soliciting or doing business with relevant persons;
- seeking to become the employee or employer of any relevant person;
- setting up or forming a company in the relevant territory with any relevant person;
- soliciting any relevant person to leave or terminate its relationship with the first party;
- soliciting any relevant person to do anything which would breach the agreement; (vi) soliciting any relevant person to reveal confidential information of the first party; and
- interfering with any of the first party's business relationships so as to negatively affect the first party.
Other restrictions can be added as deemed necessary in the circumstances.
Other contractual provisions
The provisions do not restrict any dealings between the parties' associates if there has been no employment or other business relationship between the relevant party and the relevant associate for a defined period.
The indemnities given in the non-solicitation agreement provide cover for damages, losses, costs and expenses suffered or incurred by a party and arising as a result of a breach of contract by the other party.
Either party may terminate upon breach. Similarly, either party may terminate the agreement immediately if the other party is dissolved, stops trading, ceases to pay its bills, appoints a liquidator or has a winding-up order issued against it.
In the case of the unilateral non-solicitation agreement, there is an "consideration" clause: without it, the contract may be deemed unenforceable. The consideration can be nominal or substantial depending on the circumstances.
Restraints of trade and competition law
The restraints of trade doctrine can affect the enforceability of a non-solicitation agreement. Contractual provisions that amount to covenants in restraint of trade are prima facie unenforceable. They will usually only be enforced by the courts where they are reasonable with respect to the particular interests of the parties involved (although there are some exceptions).
In addition to the restraints of trade doctrine, UK and EU competition law may affect the enforceability and legality of a non-solicitation agreement. Non-solicitation agreements may amount to anti-competitive agreements under Chapter I of the Competition Act 1998 and/or Article 81 of the EC Treaty. A discussion of these areas of law is well beyond the scope of this note. You can find out more about UK and EU competition law on the OFT website at http://www.oft.gov.uk/. Where competition law issues may arise, you should take specialist legal advice.
