→ Contracts · Sub-expertise
The non-compete clause is one of the most fragile legal tools in French law: too broad, it is annulled; too vague, it is unenforceable. Its validity depends on a subtle balance between the legitimate protection of the company and the freedom of the bound party. We draft bespoke clauses, tailored to the context (shareholder, employee, service provider) and enforceable.
→ What we cover
Clauses between shareholders (shareholders' agreement), between purchaser and seller (sale of a company), between franchisees and franchisor, or between commercial partners: duration, scope, possible consideration.
Clauses applicable to employees, subject to strict conditions: limitation in time and space, legitimate interest of the company, mandatory financial consideration.
Non-compete undertaking by the seller after the sale of their company: duration aligned with the value sold (often 2 to 5 years), geographic and material scope.
Clauses prohibiting the canvassing of customers or employees, an alternative or complement to strict non-competition, more flexible but subject to conditions.
Penalty clauses in the event of breach, specific performance, claim for damages, cessation order. Articulation with any liability insurance.
Defence against an allegation of breach, challenge to the validity of the clause (excessive nature, absence of consideration), negotiation of a settlement.
→ Our approach
01
Identification of the legitimate interest to be protected (know-how, customer base, investments), assessment of the proportionality of the contemplated clause.
02
Definition of the parameters: duration, geographic scope, prohibited activities, possible financial consideration, sanctions in the event of breach.
03
Drafting the bespoke clause and integrating it into the main contract (shareholders' agreement, sale, employment contract, commercial contract).
04
Advice on day-to-day application, anticipation of exits, defence in the event of breach or challenge, negotiation of settlements.
→ Who we help
Non-compete undertaking by the seller for 5 years over the French territory and the relevant sector of activity, in consideration for a significant portion of the sale price.
Drafting a clause applicable to a sales executive: limited to 2 years, precise geographic scope, monthly financial consideration paid during the period of application.
Clause between shareholders prohibiting an exiting shareholder from competing with the company for 3 years, articulated with bad leaver clauses and loyalty undertakings.
Enforcing a clause breached by a former employee who joined a competitor: summary proceedings for cessation, claim for damages, negotiation of a settlement.
→ Q&A
Four cumulative conditions: protect a legitimate interest of the company, be limited in time, in space and in the prohibited activity, and be proportionate to the protection sought. For employees, a fifth condition is added: financial consideration. If a single condition is missing, the clause is void.
Mandatory for employees (settled case law). Recommended but not mandatory for other clauses (shareholders, sellers, commercial partners). In the case of the sale of a company, the consideration is generally incorporated into the sale price.
There is no statutory duration, but case law generally upholds: 2 years for employee clauses, 3 to 5 years for company sales, 1 to 3 years for clauses between shareholders. A disproportionate duration may lead to annulment, sometimes to reduction by the court.
The court may declare the clause wholly void, or reduce it to reasonable proportions (reduction by the court, variable case law). The resulting uncertainty makes it advisable to draft prudent and carefully calibrated clauses from the outset.
→ Go further
Let's talk. We respond within one business day to qualify your transaction and direct you to the firm's most suitable lawyer.
Get in touch→