Non-Solicitation Clauses Between Businesses: Protecting Customer Relationships in Ontario

When two businesses work closely together — a reseller and a manufacturer, a referral partner and a service provider, a staffing firm and its client — each side often gains detailed knowledge of the other's customers. A non-solicitation clause is the tool businesses use to stop that knowledge from being used to poach customers directly.

This is a different animal from the non-solicitation clauses found in employment contracts, though the underlying idea — protecting relationships built during a period of trust — is similar. This article focuses on non-solicitation between businesses: what it typically covers, how far it can reasonably reach, and what makes one likely to hold up.

What a Business-to-Business Non-Solicitation Clause Does

A B2B non-solicitation clause restricts one contracting business from directly approaching the other's customers (and sometimes its employees or suppliers) to divert their business away, usually for a defined period during and after the relationship ends.

The underlying interest being protected is the goodwill and customer relationships one party built up — often at real cost — that the other party was only exposed to because of the contract between them.

Non-Solicitation vs. Non-Competition: Not the Same Thing

These two clause types are frequently confused, but they restrict different things.

Because non-competition clauses restrict competition itself rather than a specific improper act, Ontario courts scrutinize them more closely than non-solicitation clauses, which target a narrower and more clearly defined harm.

Where These Clauses Typically Show Up

• Reseller and distribution agreements — preventing the distributor from redirecting the manufacturer's end customers to a competing product once the relationship ends.
• Referral partnerships — stopping either partner from going around the other to deal directly with a referred customer.
• Staffing and outsourced-service arrangements — restricting a service provider (or the client) from directly hiring away the other's staff or diverting the other's customers.
• Joint ventures and teaming agreements — protecting each party's existing book of business from the other during a collaboration.

The Reasonableness Test Ontario Courts Apply

Restrictive covenants, including non-solicitation clauses, are enforceable in Ontario only to the extent they are reasonable. Courts generally weigh:

• Duration — a restriction with no defined end date, or one that runs far longer than needed to protect the legitimate interest at stake, is vulnerable to challenge.
• Definition of "customer" — a clause that sweeps in every customer of either business, rather than the specific customers actually serviced during the relationship, is more likely to be seen as overreaching.
• Legitimate business interest — the clause needs to protect something real, such as established customer goodwill or confidential customer information, not simply shield a business from ordinary competition.
• Ambiguity — vague or overly broad wording tends to be interpreted against the party trying to enforce it, so precision in drafting matters more than aggressive scope.

There is no fixed formula that makes a clause automatically reasonable — courts look at the specific relationship and what the restriction actually protects.

Drafting a Clause That Holds Up

• [ ] Define "customer" narrowly and specifically — the customers actually serviced or introduced during the relationship, not every customer either party has ever had
• [ ] Set a defined, proportionate duration tied to how long the protected relationships realistically remain valuable
• [ ] Distinguish solicitation (actively approaching) from a customer independently choosing to leave on its own initiative
• [ ] Address remedies directly — many agreements combine a right to seek an injunction with a right to claim damages, since damages alone can be hard to prove
• [ ] Keep the restriction tied to the specific interest at stake, rather than borrowing broad language from an unrelated template

If the Clause Is Breached

Proving the dollar value of lost business from a solicitation breach can be difficult, which is why many agreements pair a damages claim with the option to seek an injunction stopping the ongoing solicitation. Courts do not guarantee any particular remedy — what a business actually recovers depends on the evidence of harm and how the clause itself was drafted.

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