A Demand Letter Over Old Customers Called After the Sale

The situation

The letter arrived on a Tuesday, from a lawyer neither Dilshan nor his wife recognized, accusing him of breaching the non-solicitation clause in the agreement under which he had sold his landscaping business eight months earlier. It named four former customers who had switched their spring contracts back to him, and it demanded he stop immediately, account for the revenue, and pay damages estimated at somewhere between $40,000 and $80,000. Dilshan's first reaction, he told us later, was that he had not solicited anyone. His second, once he re-read the clause his own lawyer had helped negotiate a year earlier, was less certain, and by the time he called our office two days later he had already begun assuming the worst.

Dilshan had built the business over eleven years before selling it to Sampath, a former factory technician who had used most of his savings to buy it and leave shift work behind. The sale agreement included a standard clause preventing Dilshan from contacting the business's customer list for a set period, meant to protect the goodwill Sampath had paid for. Dilshan had gone back to landscaping work independently soon after, doing smaller jobs under his own name for a modest income, and had assumed that so long as he was not actively chasing the old client list with flyers or calls, he was in the clear.

The problem was that four of his old customers had called him directly, unhappy with how Sampath was running the business, and Dilshan had taken the work without a second thought. He had not advertised to them or approached them first, and in his own mind that distinction mattered enormously. But the clause, as written, did not distinguish clearly between a customer calling in and a former owner soliciting outward, and the broker who had facilitated the original sale, Edwin, had drafted the customer list restriction broadly, the way such clauses commonly are, to close exactly this kind of gap and protect whoever bought the business next.

What worried Dilshan most, once the shock of the letter wore off, was not really whether he would eventually be found in the wrong. It was the prospect of months of legal back-and-forth, mounting costs on both sides, and the uncertainty of not knowing what any of it would ultimately cost him. He ran a small operation with thin margins and no cushion for an unpredictable legal bill, and an open-ended fight was, for him, a genuinely worse outcome than a defined one, even a defined one that cost him something.

The risk we had to size

A demand letter is not a judgment, and the first job in a case like this is separating what the other side is asserting from what they could actually prove and actually recover. Sampath's letter asserted breach, lost profits, and damage to the business's goodwill. Proving all three, and proving a dollar figure a court would accept, is a considerably higher bar than simply asserting them, and the letter's $80,000 estimate read, on close inspection, as an opening position calculated to prompt a fast settlement rather than a genuine floor.

The real exposure had to be sized on two separate questions. The first was contractual: did taking four calls from customers who reached out unprompted amount to solicitation under a clause that, on a plain reading, restricted Dilshan from initiating contact rather than from accepting business that came to him. This was genuinely arguable either way, because non-solicitation clauses are drafted broadly on purpose, and a court asked to interpret one will look closely at the words the parties actually chose, not just at what feels fair to either side after the fact. Courts also tend to read non-solicitation clauses somewhat more sympathetically than outright non-competition clauses, because restricting solicitation is seen as a narrower and more reasonable restraint of trade than barring a former owner from working in the industry at all, which meant Dilshan was arguing from a slightly more favourable starting point than if the clause had stopped him from doing landscaping work of any kind.

The second question was financial: even if Sampath could show a breach, what had he actually lost. Four customers, at typical landscaping contract values for a business that size, put the realistic damages figure well below the letter's headline number, closer to $15,000 to $30,000 in lost revenue for that season, before any argument about whether Sampath would have kept all four customers regardless, given that at least one had already complained about service quality before switching back. Sampath would also have carried a duty to mitigate that loss, meaning a court would ask what he had actually done to keep or win back those accounts himself, rather than simply accept his own estimate of what they were worth to him.

What mattered more than either legal question, though, was what Dilshan actually wanted from the file. He was not chasing vindication and did not particularly want to relitigate the meaning of the clause in a courtroom, watching legal fees climb while the answer stayed uncertain. He wanted to know, as early and as clearly as possible, what this was going to cost him and when it would be over. That reframed the task entirely: the job was not to win an argument about contract interpretation for its own sake, but to convert an open-ended threat into a fixed, known number, as quickly as the other side could reasonably be brought to agree to one.

What we did

1. Requested the full customer list and the exact clause wording before responding. Rather than replying to the letter's headline demand, we asked for the underlying sale agreement and any records Sampath had of the four disputed jobs, which let us assess the actual contractual language and the real dollar amounts involved instead of reacting to the letter's opening estimate as though it were established fact.
2. Mapped the contract's wording against what Dilshan had actually done. We identified that the clause restricted Dilshan from soliciting, not from accepting unsolicited business, which gave him a genuine defence on at least some of the four contacts, and gave us a concrete factual basis to push back on the letter's framing rather than simply negotiating from its stated number as the starting point.
3. Estimated realistic damages using industry-standard contract values. Instead of debating the letter's $80,000 figure in the abstract, we built a bottom-up estimate of what four residential landscaping contracts were actually worth in a single season based on typical pricing for that scale of work, which reset the negotiating range to a figure Sampath's own lawyer would find considerably harder to dispute credibly.
4. Told Dilshan plainly what a fight would likely cost either way. Because predictability mattered more to him than winning outright, we set out, before any negotiation began, what litigating the interpretation question to a full conclusion would likely cost in legal fees on both sides, so he could weigh a negotiated number against that realistic baseline rather than against an idealized best case.
5. Opened settlement talks early rather than waiting out a formal claim. We contacted Sampath's counsel within two weeks of the demand letter to propose a without-prejudice discussion, which signalled Dilshan was taking the matter seriously while avoiding the added cost of formal pleadings if a workable number could be reached first, and left the door open to return to formal channels later if the number offered turned out to be unrealistic.
6. Negotiated a defined payment tied to a written release and a tighter go-forward restriction. Rather than litigating whether past conduct breached the clause, we negotiated a fixed payment covering the disputed season and a clearer, mutually agreed restriction for future customer contact, closing the underlying uncertainty for both sides at the same time and in the same document instead of leaving the restriction to be worked out later.
7. Documented the settlement so it could not be reopened. The final agreement included a full release of claims tied to the original sale dispute, so Dilshan would not face a second letter later over the same four customers, a fifth customer who might call next season, or a broader reading of the same clause than the one the parties had actually negotiated between them.
8. Confirmed the payment schedule matched what Dilshan could actually manage. Rather than agreeing to a single lump-sum figure that would have strained his cash flow during the off-season, we negotiated the $22,000 to be paid over two instalments timed around his busier spring contracts, which kept the settlement realistic rather than creating a second financial problem to solve on top of the one it was meant to close.

The outcome

Dilshan agreed to pay Sampath roughly $22,000, covering the disputed season's revenue from the four customers, and accepted a revised, more specific non-solicitation term covering the following two years. In exchange, Sampath released all claims arising from the original dispute and confirmed in writing that no further action would be taken over those four accounts, past or future. The matter closed nine weeks after the demand letter arrived, without a statement of claim ever being filed and without either side incurring the cost of formal discovery. The payment itself was split into two instalments timed around Dilshan's busier season, so the settlement did not create a fresh cash-flow problem on top of the one it resolved.

The settlement was not a win in the sense Dilshan might once have hoped for. He paid a real amount for conduct he still believed, in good conscience, was not solicitation as he understood the word, and he did so knowing a court might well have agreed with him on that narrower point. But the figure landed well below the letter's opening number, and it was a known, final cost rather than an open-ended one stretching out over months of uncertainty, which was the outcome he had actually asked for from the very start of the file.

What the file illustrates is that a non-solicitation clause is only as protective, or as risky, as its wording, and that wording is rarely as clear on the ground as it looks on the page when it is first signed. Dilshan's revised restriction now spells out, in plain terms, exactly what accepting an unsolicited call requires him to do, including a duty to decline the work and refer the customer back, which is the kind of clarity that would have prevented the original dispute entirely had it been in the first agreement Edwin drafted.

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