Understanding Non-Compete Clauses When Purchasing Or Selling A Health Practice

In our recent blog post, we reviewed the 2024 decision of the Ontario Court of Appeal, Dr. C. Sims Dentistry Professional Corporation v. Cooke, which affirmed the enforceability of a restrictive non-compete clause in a business purchase and sale agreement of a dental practice. In the Court's decision, a distinction was made between using these clauses in employment agreements and in commercial purchase and sale agreements. Justice van Rensburg, writing for the unanimous Court, discussed two reasons to make this distinction: freedom of contract and the purchaser's interest.

Freedom of Contract

One aspect that sets non-compete clauses in the commercial context apart from employment agreements is the increased freedom of contract, specifically due to negotiations, in the purchase and sale of a business. While employment agreements are drafted with a power imbalance, typically being created by an employer and agreed to by an employee, sale agreements tend to be