The non-solicitation and non-enticement clause is an important contractual mechanism for protecting a Brazilian company, which it aims to prohibit a specific person – natural or legal – from being approached by third parties who have already had some connection with the business.
The prohibition helps to preserve the stability of the company, reducing the risks of losing key people, talents and even commercial losses.
In Brazil the non-solicitation and non-enticement clause can be formalized by an independent agreement between the parties, as it may also be included in different types of contracts, such as: provision of services, supply, purchase of equity interest and even in a shareholders’ agreement.
However, so that the validity of this clause is not questioned, some precautions must be taken, as we highlighted below:
1. Purpose: Clarity regarding the purpose to be protected. The clause may be comprehensive, including not only employees, but also partners, service providers and strategic business partners.
2. Period: A specific time period must be provided for termination. A clause with an indefinite term may raise questions about its validity.
3. Geographic limitation: A specific area where the restriction will be valid must be defined, even if the area is international. The same contract may have different limitations, depending on the subject matter.
4. Proportionality: There can be no imposition of abusive restrictions that harm the freedom of the party that will be obliged.
5. Penalty: It is important to provide for a specific penalty in the event of any breach of the clause, in addition to compensation for losses and damages, which must be proportional to the business.
Having an independent agreement or providing for non-solicitation and non-enticement in certain contracts offers significant benefits to companies, preserving key business partners, which contributes to maintaining competitiveness, financial stability and business continuity, minimizing the risk of losing valuable resources and ensuring the preservation of the company’s market.
