- How a non-solicitation clause or a non-compete clause applies to you after a business sale depends on its wording and your situation, so it is worth confirming with a lawyer.
- Whether a court would enforce either kind of clause depends on the details of the sale and the clause, so it is worth confirming with a lawyer before you rely on it.
- Whether an Alberta court would enforce a clause depends on its wording and the facts, so have it reviewed before you sign.
When someone buys a business, much of the value sits in its customers and its team. A buyer does not want the seller to sign the customers up again the next month, and a seller does not want to be shut out of their working life.
A non-solicitation clause is one way to balance those concerns. This article explains what it is, how it differs from a non-compete, and what to think about on enforceability. It is general information, not advice on your agreement.
This article covers the law of Alberta.
What a non-solicitation clause does
A non-solicitation clause is a promise in a contract not to approach certain people for business or hiring purposes. In a business sale, the seller, and sometimes the seller's owners or key people, usually give it to the buyer.
It does not usually stop the seller from working or running a business in the same industry. It limits who they may approach and for how long.
Customer and employee versions
The clause is often split into two parts, each protecting a different part of what the buyer paid for.
- Customer non-solicit: the seller will not approach the business's customers to take their work elsewhere.
- Employee non-solicit: the seller will not recruit or hire the business's staff.
- Supplier or contractor non-solicit: sometimes added, to protect key relationships.
Each part should say who is covered, what counts as soliciting, and for how long the promise lasts. Vague wording is a common source of disputes later.
How it differs from a non-compete
A non-compete restricts competing at all, often within an area and for a set time. A non-solicit is narrower because it targets approaches to particular people.
| Feature | Non-solicitation | Non-competition |
|---|---|---|
| What it restricts | Approaching customers or staff | Operating or working in a competing business |
| Usual breadth | Narrower | Broader |
| Seller's freedom to work | Largely kept | More limited |
Because a non-compete is broader, buyers sometimes rely on a non-solicit alone, or on both together. Which is suitable depends on the business and on what the buyer is paying for.
Will an Alberta court enforce it?
There is no simple yes or no. Whether a court enforces a clause depends on how it is worded, what it covers, how long it lasts, the context of the sale and the facts of any dispute. How a court would treat a particular clause depends on your situation, so it is worth confirming with a lawyer.
Also be clear about who is bound. A Corporate Registry search, requested through a registry agent, can show a corporation's owners, directors and legal addresses. That helps you confirm which people and companies should sign the clause.
What to do next
- Decide whether you need a non-solicit, a non-compete or both.
- List the customers, employees and contractors the clause should cover.
- Set a reasonable length and keep the scope tied to the business sold.
- Confirm that every person who should be bound will sign.
- Have a lawyer review the wording before you sign.
Frequently asked questions
Is a non-solicit the same as a non-compete?
No. A non-solicit limits approaching customers or employees, while a non-compete limits competing at all. The non-compete is the broader restriction.
Can a seller still work in the same industry with a non-solicit?
Often yes, since the clause targets who the seller approaches rather than whether they may work. The wording decides this, so read it closely and ask a lawyer if it is unclear.
Do Alberta courts always enforce these clauses?
Not automatically. Enforcement depends on the wording, the scope and the facts, so a lawyer can give you a view on a specific clause.
Who should sign the clause in a business sale?
Usually the seller and anyone who owns or controls the selling company and holds key relationships. A Corporate Registry search can show a corporation's owners and directors.
Sources
- Alberta.ca – Find corporation details — alberta.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a buying & selling a business question
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