The Supreme Court of Canada recently addressed the issue of the
enforceability of restrictive covenants where the purchaser of a
business offered employment to the business’s previous owners
(Payette v Guay Inc. 2013 SCC 45). In this
case, the Supreme Court of Canada put to rest a long-standing
inconsistency in the law regarding how broad a restrictive covenant
can be when it is entered into in the context of both an agreement
for sale of a company and a subsequent employment contract for some
of the vendor’s primary employees.
Payette v Guay Inc. confirms
that where an agreement for sale of a company gives rise to both a
commercial contract and an employment contract, that context can be
used to interpret the wording of the restrictive covenant.
Specifically, the Court may apply the broader principles used to
interpret such covenants where the parties have equal bargaining
power (such as in the context of a commercial transaction) rather
than the narrow
