Restrictive Covenants - Detailed Analysis

Last Updated: October 2022

(b) Covenants Arising from the Sale of a Business

The Supreme Court of Canada, in Payette v. Guay, held that the criteria for analyzing the enforceability of restrictive covenants in the context of the sale of assets is less demanding than in the employment context and the basis for finding such covenants reasonable is “much broader.”1 The courts are less inclined to find an ambiguity in such covenants than they are in the context of employment agreements.2

  1. Payette v. Guay inc., [2013] 3 SCR 95, 2013 SCC 45 (CanLII), at para. 58.
  2. See, for instance, 853947 B.C. Ltd. v. Source Office Furniture & Systems Ltd., 2016 BCSC 2233 (CanLII).