Define: Prospective Client

What Prospective Client Means in a Contract

A Prospective Client is a defined term found most often in employment contracts, consultancy agreements, agency arrangements and distribution agreements. It describes a person or entity that has not yet become a customer but with whom the company has engaged in genuine business discussions aimed at supplying goods or services. The purpose of the definition is to extend certain restrictive covenants beyond existing customers to also capture pipeline relationships that have real commercial value.

The concept matters because many businesses invest significant time and resource in courting potential business before any sale actually occurs. Without a defined term like Prospective Client, a departing employee or terminated agent could argue that only signed customers are protected, leaving warm leads and near-completed deals unprotected. By expressly defining the term, the drafter closes that gap and gives the restriction commercial teeth.

The definition typically ties the status of a Prospective Client to a specific time window before a triggering event, most commonly the termination date of an employment or agency relationship. This time-bound approach prevents the definition from capturing stale or long-forgotten contacts that no longer represent a live commercial opportunity.

How Prospective Client Is Defined or Measured

The wording usually requires that actual negotiations or discussions have taken place, rather than merely identifying a target on a marketing list. This is a meaningful distinction because it means the company must be able to evidence some level of engagement, such as meetings, calls, correspondence or draft proposals, regarding the possible distribution, sale or supply of goods or services.

Measurement is almost always anchored to a lookback period, commonly six months immediately preceding the termination date, though the exact duration varies by contract and sector. The definition may also require that the individual bound by the restriction personally had dealings with, or knowledge of, that prospective client, which narrows the scope to relationships the individual could realistically exploit.

• Existence of documented negotiations or discussions within the specified period
• A connection to the possible sale, supply or distribution of goods or services
• Often a requirement that the restricted individual had personal involvement or knowledge
• A defined trigger date, usually termination or expiry of the agreement

Where Prospective Client Appears in Agreements

The term is a staple of post-termination restrictive covenants in employment contracts and consultancy agreements, where it sits alongside definitions such as customer, client or business contact to describe who a former employee or contractor cannot solicit or deal with. It also appears in agency and