The non-solicitation clause has become increasingly common in Brasil as a way to protect the value of a business.
More than just preventing the hiring of employees or the solicitation of clients, it serves as a tool for preserving intangible assets, preventing one party from using its relationship, position, or role within the company to lure employees, clients, or suppliers.
For it to work effectively in Brazil, a few key points should be considered:
1. Scope of protection: It is important to define clearly who is covered by the restriction, which may include clients served within a specific period, qualified leads, strategic suppliers, and key personnel. When the scope is not well defined, disputes are more likely to arise over how the obligation should be applied.
2. Duration of the restriction: Beyond setting the overall term of the obligation, the clause should state precisely when the restriction begins and when it ends. Clear time markers help all parties understand exactly when the obligation is in effect.
3. Definition of “solicitation”: Describing in detail the prohibited practices brings certainty. This can be done through an illustrative list or an enumerated set of acts, clarifying whether an attempted solicitation is sufficient to constitute a breach, whether the restriction covers direct and/or indirect actions, and how far it extends to third parties connected to the parties. Reasonable carve-outs are equally important, such as unsolicited applications, open recruitment processes, or clients who approach the business on their own initiative.
4. Remedies for breach: Enforceability in Brazil depends on well-structured remedies. Penalties may be set as fixed amounts or calculated on the basis of revenue lost from the diverted client, without prejudice to additional claims for damages.
When combined with confidentiality, non-compete, and data protection provisions, non-solicitation moves beyond boilerplate wording and becomes a robust governance tool in Brazilian business that reduces the risk of disputes and helps preserve the long-term value of the company.
