Elements of a Non-Compete Agreement

A non-compete agreement is one of those documents that can be difficult when trying to enforce it. At its core, it is a restraint of trade clause: one party agrees not to compete, or not to compete in a particular way, for a defined period and within a defined scope. The traditional position has been that such clauses are prima facie unenforceable unless they are reasonable with reference to the interests of the parties and the public. Nigerian courts have followed that common-law approach for years, while more recent statutory and judicial developments have added an important modern layer to the analysis.

That is why the real question is not whether a non-compete clause exists. The real question is whether it is drafted well enough to survive scrutiny. Courts look at the purpose of the clause, the legitimate interest it is trying to protect, the length of time it lasts, the geographic area it covers, and whether it goes further than is necessary. Recent Nigerian commentary also notes that section 68(e) of the Federal Competition and Consumer Protection Act 2018 provides that a contract of service or a contract for the provision of services may contain restrictions on work during or after termination, provided the restraint does not exceed two years.

1. A clearly identified relationship

A good non-compete agreement begins by making the relationship obvious. Is this an employment contract, an independent contractor arrangement, or a business transaction involving the sale of goodwill? That matters because the clause only makes sense when it is tied to a real commercial relationship, not a vague promise pasted into a document without context. Nigerian legal commentary on non-compete clauses in employment contracts emphasizes that enforceability turns on the actual contract and the nature of the relationship, not just the label on the page.

2. A legitimate business interest to protect

A non-compete clause is strongest when it protects something real: trade secrets, confidential information, client relationships, pricing strategy, goodwill, or a specialized business model. Courts are generally more willing to respect a restraint when the employer or business can show a genuine proprietary interest instead of a mere desire to block competition. The IBA’s review of Nigerian law states that courts consider the nature of the business and the interest the employer seeks to protect, while recent National Industrial Court decisions have also recognized trade secrets and similar interests as relevant.

That is why a lazy clause like “the employee shall not compete” is usually weak. It says almost nothing about what is being protected. A stronger clause explains the business interest in plain terms, so the restriction feels tied to protection rather than punishment. Nigerian case law has repeatedly treated overbroad restraints with suspicion, especially where the employer fails to identify the legitimate interest behind them.

3. A precise description of the restricted activities

This is where many agreements become too broad. A non-compete clause should say exactly what the person cannot do. Is the restriction about joining a direct competitor? Starting a similar business? Soliciting clients? Using confidential information? Working in a particular role? The more precise the wording, the easier it is to argue that the clause is reasonable. Nigerian commentary on restrictive covenants consistently points to the need for specificity in the activity being restrained.

Think of it like a roadblock. A proper non-compete does not block the entire highway unless there is a serious reason. It blocks only the lane that poses the actual risk. If the clause tries to shut down every possible form of work in an industry, courts are much less likely to support it. The NICN and Court of Appeal line of reasoning in Nigerian cases reflects that suspicion of far-reaching restraints.

4. A reasonable time limit

Duration is one of the most important elements. A non-compete that lasts too long is vulnerable. Nigerian law has historically asked whether the time restriction is no greater than necessary, and more recent commentary notes the FCCPA’s two-year outer limit for relevant contracts of service or service provision. Even so, Nigerian courts continue to assess the actual reasonableness of the period in light of the facts.

In practical terms, the time limit should match the commercial reality. A clause that lasts years may be defensible in one context and excessive in another. The idea is not to bury the former employee, contractor, or seller under a permanent disability. The idea is to give the business enough breathing space to protect what it legitimately built.

5. A sensible geographic scope

A non-compete should also say where it operates. A nationwide or worldwide restriction may be too aggressive unless the business truly operates at that scale and the risk justifies it. Nigerian courts commonly look at the geographic area as part of the reasonableness test. If the company only competes in a local market, then a global ban will usually look far wider than necessary.

This is one of those places where a template is useful, because it forces the drafter to think. Is the real concern Lagos only, a region, a state, or the whole country? If the clause cannot answer that clearly, it is probably not tight enough yet. The narrower and more realistic the geography, the stronger the argument that the restriction is protecting business rather than suppressing livelihood.

6. A clear explanation of the role being restricted

A good non-compete does not just talk about industry; it talks about role. Nigerian decisions and commentary show that the court will consider the employee’s position, the nature of the business, and the level of access to confidential information. That means a senior executive with access to strategy may justify a stronger restriction than a junior staff member with no access to sensitive information.

This is really about proportionality. The clause should match the danger. If the person had access to customer data, pricing, or trade secrets, the restraint can be more targeted. If the person did not, the restraint should usually be lighter. A one-size-fits-all ban tends to look careless in court.

7. Compatibility with public policy and the right to earn a living

A non-compete clause does not live in a vacuum. Nigerian courts have repeatedly balanced the employer’s interest against the employee’s right to work and the public interest. The IBA’s review notes that the courts test reasonableness by looking at the interests of the parties and the public, and the NICN has held in some cases that a broad restraint may be unreasonable if it prevents a person from securing adequate means of livelihood.

That is why a non-compete agreement should never read like a punishment clause. It should read like a protection clause. The difference matters. One sounds like retaliation; the other sounds like risk control. Courts are much more comfortable with the second.

8. Remedies that make sense

A strong non-compete agreement usually explains what happens if the clause is breached. In practice, businesses often want injunctive relief, damages, or both, depending on the harm caused. The remedy should also be proportional to the breach. A template that addresses remedies in advance helps avoid confusion when a dispute actually arises.

Why the Non-Compete Agreement by LegalDoc is Preferable

This is exactly the kind of document where structure pays off. A good non-compete agreement template helps you pin down the parties, the protected interest, the restricted conduct, the duration, the geography, and the remedy. It forces the agreement to be specific enough to be useful and restrained enough to be defensible. In Nigerian law, that balance is the entire game.

Frequently Asked Questions

What is the main purpose of a non-compete agreement?

Its purpose is to protect a legitimate business interest by preventing unfair competition for a limited period and within a limited scope. Nigerian courts assess whether that protection is reasonable rather than excessive.

Is a non-compete agreement always enforceable in Nigeria?

No. Nigerian law has traditionally treated restraints of trade as prima facie unenforceable unless they are reasonable, and courts still examine scope, time, geography, and the interest being protected.

How long can a non-compete last?

Recent commentary on the FCCPA says a restraint in a contract of service or services agreement should not exceed two years, but the courts still assess reasonableness in context. A shorter, well-justified period is usually safer.

What makes a non-compete clause too broad?

A clause becomes risky when it tries to stop too much: too many kinds of work, too large a territory, or too long a period. Nigerian courts have repeatedly emphasized that the restriction must go no further than necessary to protect the legitimate interest.

Should a non-compete clause be different for senior staff and junior staff?

Yes. The employee’s role matters. Courts consider the person’s seniority, access to confidential information, and the nature of their work when deciding whether a restraint is reasonable.

Conclusion

A non-compete agreement is only as strong as its weakest element. If the protected interest is vague, the activities are overbroad, the duration is excessive, or the geography is unrealistic, the clause starts to look less like protection and more like restraint for its own sake. Nigerian law does not look kindly on that.

The best non-compete clauses are narrow, clear, and commercially honest. They protect what truly needs protection, and they do not go beyond that. That is exactly the kind of balance a well-drafted LegalDoc non-compete agreement template helps you achieve.