Do I have any legal standing against an independent contractor who is soliciting clients if I just purchased the client list on a contract?
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Do I have any legal standing against an independent contractor who is soliciting clients if I just purchased the client list on a contract?
I recently purchased a small business which uses independent contractors. One of the IC’s did not not have a non-solicit agreement with the previous owner and they refused to sign one with me. I have terminated based on that refusal. This person is now soliciting my clients. Do I have any legal standing to stop her since I purchased the business/client list in a binding contract from the previous owner?
Asked on April 21, 2012 under Business Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
No, you would have no basis for legal action against an independent contractor of the prior owner who never signed a non-solicitation agreement. Generally speaking, solicitation of another business's clients is legal, even if it's a business which the soliciting party itself did business with--that's why non-solicitation agreements are necessary, to prevent or prohibit solicitation which would otherwise be legal. A non-solicitation agreement is a contract; it is only enforceable against someone who voluntarily entered into it. If this IC never signed a non-solicitation agreement, there is no basis for enforcing some non-soliciation terms or conditions against it. For future reference, if concerned about this in a business purchase, don't buy the business unless and until the seller can obtain and show he/she can transfer (assign) to you non-solicitation (and/or confidentiality and non-competition) agreements from key employees, vendors, or contractors.
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