In the context of a purchase and sale of a business, a restrictive covenant is lawful unless it can be established on a balance of probabilities that its scope is unreasonable

Payette v. Guay inc., 2013 SCC 45 is an important commercial decision.  Generally restrictive covenants (non‑competition and non‑solicitation agreements) are unenforceable unless shown reasonable.  However, here the Supreme Court holds:

 

[58]                          Whether non‑competition and non‑solicitation clauses in a contract for the sale of assets are reasonable must be determined on the basis of the rules that govern freedom of trade so as to favour the application of such restrictive covenants:  Burnac Corp. v. Les Entreprises Ludco Ltée, [1991] R.D.I. 304 (Que. C.A.).  This means that the criteria for analyzing restrictive covenants in a contract for the sale of assets will be less demanding and that the basis for finding such covenants to be reasonable will be much broader in the commercial context than in the context of a contract of employment.  I am therefore of the opinion that, in the commercial context, a restrictive covenant is lawful unless it can be established on a balance of probabilities that its scope is unreasonable.