Non-solicitation vs non-competition clauses in a B2B commercial contract

The end of a distribution contract, a commercial partnership or an integrated services agreement often raises the same concern for the business owner: what will remain of the relationship once the contract has ended? Will the distributor keep the customer file built up over many years? Will the former partner approach the sales manager who knows all the strategic accounts? Two contractual tools address these concerns, the non-competition clause and the non-solicitation clause, but they do not protect the same thing and are not subject to the same validity rules. This analysis sets out the practical difference between prohibiting a partner from carrying on a competing activity, prohibiting it from poaching customers, and prohibiting it from poaching employees, together with the conditions of validity and the sanctions applicable in the event of breach.

Two clauses that look alike on paper but differ greatly in practice

The two clauses are often confused because they pursue a similar objective: protecting a commercial position after a business relationship has ended. But the extent of the restriction they impose is in no way comparable, and it is precisely this extent that the courts examine.

The non-competition clause: prohibiting an entire activity

A non-competition clause in a commercial contract prohibits a contracting party from carrying on, for a fixed period and within a given territory, an economic activity identical or similar to that of the partner it has just left. It targets the activity itself, not specific individuals. A former franchisee who accepts a non-competition clause undertakes not to open a business of the same type in a defined geographical area, regardless of whether or not it approaches any particular customer.

This is the more radical of the two clauses, as it directly infringes freedom of enterprise and freedom of trade and industry. That is also why the courts scrutinise it closely and accept its validity only if it remains proportionate.

The non-solicitation clause: prohibiting the approach of specified persons

A non-solicitation clause in a commercial contract is more targeted. It does not prohibit carrying on a competing activity. It only prohibits approaching, canvassing or poaching identified persons: the other party's customers, its employees or its suppliers. The partner remains free to practise its trade, including in direct competition, but undertakes not to draw on a specific pool.

This distinction has a direct consequence for the legal regime. Because it restricts economic freedom less, the non-solicitation clause is generally accepted more readily, but it does not escape judicial scrutiny where it produces, in practice, the same effects as a non-competition covenant.

Poaching a customer or poaching an employee: two legal realities

The point most often misunderstood in practice is that the non-solicitation clause in fact covers two situations that must be carefully distinguished, as they do not engage the same protected interests.

Soliciting the other party's customers

The customer non-solicitation clause prohibits a partner from approaching, after the end of the contract, the customers it came to know through the commercial relationship. It protects a decisive intangible asset: the customer file, the privileged contacts, the knowledge of purchasing habits.

Its difficulty lies in the fact that an overly broad clause ends up amounting to a disguised non-competition covenant. Take an IT service provider that has worked for several years for a principal and is prohibited from soliciting not only that principal but also all customers in its sector. Such wording no longer protects an identified clientele; it deprives the provider of its market. The courts then reclassify the clause and apply the stricter requirements of non-competition.

To remain valid, the customer non-solicitation clause must designate a perimeter of customers genuinely connected with the commercial relationship: the customers brought by the partner, those with whom it was in direct contact, those listed in a schedule to the contract. The more objectively the perimeter is defined, the better the clause withstands scrutiny.

Poaching the other party's employees

The staff non-solicitation clause, often called a non-poaching clause, prohibits a partner from hiring or approaching the other party's employees during the performance of the contract and for a certain period after it ends. It is common in subcontracting, intellectual services and technical cooperation contracts, where teams work side by side and the risk of skills being captured is high.

Its particular feature is that it takes effect between the two signatory companies, without directly binding the employee concerned. The employee is not a party to the commercial contract: he or she retains full freedom to work and may apply wherever he or she wishes. The clause therefore does not prevent the employee from leaving; it prevents the partner company from actively soliciting him or her. This nuance is crucial: a clause purporting to prevent an employee from being hired would infringe the employee's fundamental freedom to work and would be vulnerable.

In practice, the central question is that of proof of active solicitation. Poaching requires a step, an approach, an offer. The mere fact that an employee spontaneously leaves a company to join its former partner does not, in itself, constitute a breach of the clause. This is what distinguishes wrongful poaching from normal mobility in the labour market.

Conditions of validity: what the courts verify

Neither clause is valid as a matter of principle. Their lawfulness depends on a balance between the legitimate protection of an economic interest and the preservation of freedom of trade.

Non-competition: limits in time, space and activity

A non-competition clause is accepted only if it meets three cumulative conditions: it must protect a legitimate interest, be limited in time, in space and as to the activity concerned, and remain proportionate to that interest. A prohibition with no geographical limit, or covering a manifestly excessive period, or targeting an activity unconnected with the original relationship, is disproportionate and liable to be annulled. The application of these criteria to the undertaking given by the seller of a business is examined in our article on the non-competition clause in the sale of a business (cession de fonds de commerce).

The commercial agent contract illustrates this statutory control. Article L134-14 of the French Commercial Code expressly limits the duration of the clause:

The non-competition clause is valid only for a maximum period of two years after the termination of a contract.

The same provision requires that the clause relate to the geographical sector and, where applicable, the group of persons entrusted to the agent, as well as the type of goods or services concerned. In other words, the law transposes to the agency contract the criteria that case law requires more broadly: limited duration, defined territory, circumscribed activity.

The question of financial consideration

This is where the comparison with employment law creates the most misunderstanding. In employment law, a non-competition clause imposed on an employee is valid only if it provides for financial consideration. This requirement is specific to the employment relationship and does not transpose mechanically to relations between companies. The conditions of validity applicable to an employee's undertaking are detailed in our article on the non-competition clause in the employment contract.

In a B2B commercial contract between professionals, French law does not, as a general rule, require financial consideration for the non-competition clause or the non-solicitation clause. Both parties are presumed to have negotiated with full knowledge of the position. Nevertheless, the absence of consideration is not neutral: it informs the assessment of proportionality and of a possible significant imbalance, in particular where the clause weighs heavily on one of the contracting parties without a corresponding benefit.

Non-solicitation: greater freedom, real limits

Since the non-solicitation clause is less restrictive of freedom of enterprise, its validity is assessed with greater flexibility. It must nonetheless remain determinate: perimeter of the persons concerned, reasonable duration, precise purpose. A non-poaching clause of unlimited duration, or targeting all the staff of a group with no connection to the services, would be exposed to the same criticism of disproportion.

The decisive boundary remains the following: as long as the clause leaves the partner a real possibility of continuing its activity, it falls within the lighter regime of non-solicitation. As soon as it prevents the partner in fact from operating, it moves into the demanding regime of non-competition, with all its conditions.

Statutory safeguards: clauses deemed unwritten and significant imbalance

Beyond the case-law control of proportionality, several provisions allow an abusive clause to be set aside, with a radical consequence: the clause is deemed unwritten (réputée non écrite), that is, removed from the contract as if it had never existed, without annulling the rest of the agreement.

Significant imbalance in the standard-form contract

Article 1171 of the French Civil Code neutralises, in standard-form contracts (contrats d'adhésion), non-negotiable clauses that create a significant imbalance:

In a standard-form contract, any non-negotiable clause determined in advance by one of the parties which creates a significant imbalance between the rights and obligations of the parties to the contract is deemed unwritten.

This provision concerns contracts whose terms are imposed by one party without any real possibility of negotiation, a common situation in framework distribution contracts or general terms and conditions. A non-competition or non-solicitation clause slipped into a standard form, without consideration and without any possibility of discussion, may thus be set aside. The article specifies, however, that the review of imbalance relates neither to the main subject matter of the contract nor to the adequacy of the price to the performance.

Significant imbalance in commercial relations

In matters of restrictive competition practices, Article L442-1 of the French Commercial Code, which resulted from the recodification of former Article L442-6, penalises subjecting a commercial partner to obligations creating a significant imbalance in the rights and obligations of the parties. This mechanism is distinct from Article 1171 of the Civil Code: it applies to relations between companies irrespective of whether the contract is classified as a standard-form contract, and it opens the way to an action, including one brought by the Minister for the Economy.

An asymmetric non-solicitation clause, which binds only one of the parties although both exchange employees or customers, or a non-competition clause whose burden is manifestly disproportionate to the advantage obtained, may be analysed as a significant imbalance within the meaning of that provision.

Distribution networks and Article L341-2

Contracts that organise a commercial distribution network benefit from specific protection. Article L341-2 of the French Commercial Code deems unwritten any clause which, after the expiry or termination of such a contract, restricts the freedom of the operator who entered into the contract to carry on a commercial activity.

Any clause the effect of which is, after the expiry or termination of one of the contracts referred to in Article L. 341-1, to restrict the freedom of the operator who previously entered into that contract to carry on a commercial activity is deemed unwritten.

This provision strictly regulates post-contractual clauses in affiliation and franchise networks, which must meet precise conditions to avoid the sanction. A franchisor wishing to maintain a non-competition covenant after the end of the contract may do so only on the restrictive conditions laid down by law, failing which the clause disappears.

Sanctions for breach

The sanction depends on who invokes what. Two approaches coexist: the sanction of the unlawful clause, and the sanction of the breach of a lawful clause.

The unlawful clause: nullity or clause deemed unwritten

Where the clause is disproportionate or imbalanced, it may be annulled by the court or deemed unwritten, depending on the basis invoked. The difference is not merely theoretical. A clause deemed unwritten is treated as never having existed, which neutralises the restriction without affecting the rest of the contract. The partner then recovers full freedom of action, and the company that relied on the protection is left without a safety net.

In some cases, rather than destroying the clause altogether, the courts accept reducing its scope to bring it within acceptable limits, in particular as to duration or geographical perimeter. This power of reduction is not, however, automatic and depends on how the clause is drafted.

Breach of a valid clause: contractual liability

Where a valid clause is breached, the defaulting contracting party incurs contractual liability. The victim may claim damages for the loss suffered: loss of turnover linked to the departure of diverted customers, replacement costs for a poached employee, disruption of the business. The recurring difficulty remains the demonstration and quantification of the loss, which is often hard to establish precisely.

To overcome this evidential obstacle, drafters frequently insert a penalty clause (clause pénale), which fixes in advance the amount due in the event of breach. This clause relieves the victim of having to prove the exact extent of its loss, although the court retains the power to moderate a penalty that is manifestly excessive or derisory. The injured party may also seek an end to the wrongful conduct, where appropriate subject to a daily penalty (astreinte).

The action for unfair competition against the third party

Breach of a non-solicitation clause raises a specific difficulty where the beneficiary of the poaching is a third party to the contract. The clause binds only its signatories, by virtue of the relative effect of contracts. But the injured company then has another lever: an action for unfair competition, based on tortious liability, provided it demonstrates wrongful poaching that has disrupted its business or an unfair capture of its customers. The systematic diversion of key employees or strategic customers may thus be penalised even in the absence of any clause, provided that fault and loss are established. The practical cases of disorganisation and disparagement accepted under this action, and their sanctions, are set out in our analysis of unfair competition.

Drafting and securing these clauses in practice

The strength of these clauses is determined at the drafting stage, well before any dispute. Several practices reduce the risk of annulment.

• Choose the right clause for the objective: prohibiting an activity is a matter of non-competition, protecting a customer file or a team is a matter of non-solicitation, which is less risky to uphold.
• Define the perimeter precisely: named list of the customers or employees concerned, limited duration, defined territory, circumscribed activity. A determinate clause withstands scrutiny better than a general one.
• Check the nature of the contract: standard-form contract subject to Article 1171 of the Civil Code, commercial agent contract subject to the two-year limit of Article L134-14, distribution network contract subject to Article L341-2.
• Anticipate significant imbalance: look for reciprocity of undertakings and document the consideration, even if non-financial, obtained by the party bearing the restriction.
• Provide for a moderate penalty clause to facilitate enforcement without exposing the clause to judicial reduction.

Conclusion

The non-solicitation clause and the non-competition clause are not two variants of the same tool, but two instruments of different intensity. Non-competition closes a market; non-solicitation protects specific relationships. This difference of degree governs the whole regime: the broader the restriction, the stricter the scrutiny, and the greater the risk that the clause is deemed unwritten or reduced. The most costly reflex is to pile up maximalist prohibitions in the belief of protecting oneself more. In reality, an overly broad clause is a fragile clause, often ineffective on the day it should take effect.

The substantive position is as follows: a narrow, precisely delimited and reciprocal clause protects better than a general clause, because it survives judicial scrutiny. Before signing, or having signed, a commercial contract containing this type of undertaking, have the drafting of the clause audited in light of its proportionality, the nature of the contract and the existence of consideration, rather than discovering its ineffectiveness at the time of a dispute.

Frequently asked questions

Must a B2B non-competition clause provide for financial consideration, as in employment law? No, the requirement of financial consideration is specific to the employment relationship. Between companies, French law does not, as a general rule, require financial consideration for a non-competition or non-solicitation clause. The absence of consideration nonetheless remains a factor in assessing proportionality and possible significant imbalance within the meaning of Article 1171 of the Civil Code and Article L442-1 of the Commercial Code.

What is the maximum duration of a non-competition clause in a commercial contract? There is no general ceiling applicable to all commercial contracts. For the commercial agent contract, Article L134-14 of the Commercial Code sets a clear limit of two years after the termination of the contract. For other contracts, the duration must remain proportionate to the interest protected, and an excessive duration exposes the clause to annulment or reduction by the court.

What is the difference between poaching a customer and poaching an employee? Poaching a customer means diverting the clientele connected with the commercial relationship, which is what the customer non-solicitation clause targets. Poaching an employee means actively approaching the other party's staff, which is what the non-poaching clause targets. Since the employee is not a party to the contract, he or she retains full freedom to work: the clause prohibits active solicitation, not spontaneous departure.

Can a non-solicitation clause be reclassified as a non-competition clause? Yes. Where the non-solicitation clause is drafted so broadly that it prevents the partner in practice from carrying on its activity, the courts reclassify it and apply the stricter conditions of non-competition. The decisive criterion is whether the contracting party retains a real possibility of practising its trade after the end of the contract.

What happens if the clause is held to be abusive or imbalanced? Depending on the basis, the clause may be annulled or deemed unwritten, that is, removed from the contract as if it had never existed, without affecting the rest of the agreement. This is the case for a clause creating a significant imbalance in a standard-form contract, under Article 1171 of the Civil Code, or for a clause restricting freedom to operate after the end of a distribution network contract, under Article L341-2 of the Commercial Code.

How can a partner that breaches a valid clause be penalised? The victim may bring a claim in contractual liability against the contracting party and seek damages for its loss, as well as an end to the conduct, where appropriate subject to a daily penalty (astreinte). A penalty clause included in the contract makes it possible to fix the amount due in advance and to avoid the difficulty of proving the exact extent of the loss, subject to the court's power of moderation.

Can action be taken against the third-party company that hired a poached employee? Yes. Even in the absence of a clause enforceable against the third party, the injured company may bring an action for unfair competition on the basis of tortious liability. It must demonstrate wrongful poaching that has disrupted its business or an unfair capture of its customers. The mere departure of an employee to a competitor is not enough: fault and loss must be established.