Non-compete clauses (also known as restrictive covenants) are commonly found in employment contracts. They are also used in many other business relationships.

They are designed to prohibit third parties from offering business to the marketplace in competition with you. Provided they are appropriate and relevant to the relationship between the parties, yes, they do work. Having them in the contract gives you the ability to pursue a third party even if you decide not to. Not having them means you cannot do anything about it at all, it is a lost opportunity.

They are a deterrent and the majority of third parties will think twice before breaching such provisions. Aside from the business protection side, also think of them as a potential tool for encouraging strong strategic relationships. If the other party has confidence that you won’t swipe their customer base, they are more likely to enter into ventures with you.

Please contact WCL to discuss your contract needs further.