Drafting Enforceable Customer Solicitation Restrictions

Legal Issues in Drafting Restrictions

A restriction on soliciting customers should be part of most noncompetition agreements. Because the restriction does not prevent working in an industry or geographic area, it is more likely to be enforced than one that does and may still be enforced if a broader restriction is not.1 Also, a customer restriction may by itself provide sufficient protection against competition by former salespersons.

The legal requirements for a customer restriction, as for other restrictions, are legal consideration, protection of a legitimate business interest, and reasonable scope. Because it is a narrower restriction, no geographic limitation is ordinarily needed.2

The primary drafting problem is the scope of restricted customers. A ban as to all customers risks being held overbroad and unenforceable, especially if the employer dominates the relevant market, has a large number of customers spread across a wide geographic area, or has distinct product lines or services that draw different types of customers.

Cases Enforcing Restrictions as to All Customers

Bans on soliciting and doing business with any of an employer's customers, even certain prospective ones, have been enforced in many court decisions. In Tower Oil & Tech. Co. v. Buckley, 99 Ill.App.3d 637, 425 N.E.2d 1060 (1st Dist. 1981), the court affirmed a jury award of damages for a salesperson's breach of a three-year restriction on soliciting or selling industrial lubricants to any customer or prospect shown on the company's records. The restriction applied to just 2.4% of the Chicago-area market and protected a legitimate business interest of preventing the loss of an established clientele to a salesperson to whom the company had provided training and customer access. Since it merely prohibited soliciting and selling to a small percentage of Chicago-area customers, the restriction needed no geographical limit to be reasonable. See also PCx Corp. v. Ross, 168 Ill.App.3d 1047, 522 N.E.2d 1333 (1st Dist. 1988) (enforcing a two-year, nationwide restriction on soliciting or dealing with any of employer's customers).

In McRand, Inc. v. van Beelen, 138 Ill.App.3d 1045, 486 N.E.2d 1306 (1st Dist. 1985), the court enforced a two-year restriction on soliciting any customer and a one year restriction on soliciting prospective customers for which the employee had recorded business development time. The court agreed that no geographic restriction was needed and found the time lengths reasonable based on how...