Non-stretch of non-compete

 A contractor and company C agreed to the following clause titled "Non Solicitation Covenant":

Contractor will not enter into or attempt to enter into (on Contractor's own behalf or on behalf of any other person or entity) a business relationship to provide the delivery of consulting services to any company or entity that: (i) was identified to Contractor by Company, as a Customer or Partner of Company, or (ii) was sold any of Company's software or services by Company.

Company C used to have a customer A, whose owner created an entirely different business B. The extent of C's incompetence or misconduct prompted A to stop doing business with company C. B has never had a relationship with company C. The contractor met A's/B's owner by virtue of contractor's business relation with company C, and that owner has asked the contractor to do a project for B. The question is whether it is lawful for the contractor to accept B's request to do business with him.

Based on this information, acceptance is lawful because B has never had a contract or partnership relation with C. C's contract relation was with A only, not with B. Nor does the scenario as described suggest that C notified, let alone truthfully, the contractor that B is C's customer or partner. Generally speaking, the sole fact that A and B are owned by the same person does not extend the scope of the clause to B.

Furthermore, A's reason(s) for severing its relations with C weakens or strikes the materiality of the non-compete clause as to A. That is because the legitimate interests that the clause is intended to protect regarding A have disappeared. An exception might be some scenario where B bears too much resemblance with A, since that could support the finding that B was devised to elude legal restrictions that directly or indirectly involve A. This is somewhat analogous to a monopolistic owner who creates multiple companies in order to give a false and misleading impression of competition.

The contractor who submitted this question elsewhere (and unfortunately got rejected there, BTW) also asked whether it is lawful for him to work on projects for B via the contractor's wife's business.

Although it is lawful on grounds of what has been explained so far, that approach can backfire. That approach suggests that the contractor understood the non-compete clause to also prevent him from working for B. The involvement of an intermediary entity (i.e., his wife company) can be construed as contractor's attempt to dissimulate his breach of the clause.

Interestingly, in January of 2023 the Federal Trade Commission proposed a statutory ban on non-compete clauses. The public consultation ended in April. Although governments' intrusions in the economy typically lead to distortions, acquaintance with the FTC's legislative draft might give contractors some useful arguments to prevent the counterparty from unduly stretching the scope of a non-compete clause.