Restrictive Covenants - Detailed Analysis
Last Updated: October 2022
(a) Onus
In the context of an employment contract, the party relying on the covenant bears the onus of establishing that it is reasonable.1 By contrast, in the commercial context, i.e. the sale of a business, the Supreme Court of Canada held in Payette v. Guay that “a restrictive covenant is lawful unless it can be established on a balance of probabilities that its scope is unreasonable.” 2While the decision was rendered under the civil law of Quebec, the principle is equally applicable under common law.