This Week at the SCC (13/09/2013)

The Supreme Court of Canada released two judgments, granted leave to appeal in one case and denied leave to appeal in one case of interest to Canadian business this week.

In Payette v. Guay Inc., 2013 SCC 45, the Supreme Court of Canada confirmed that the rules applicable to restrictive covenants apply with greater rigour when such covenants are found in a contract for the sale of a business as opposed to a contract of employment.  The rationale for this difference, the Court stated, is the imbalance of power which is inherent in employer-employee relationships, but which is presumed to be absent in vendor-purchaser relationships.  The Supreme Court of Canada reiterated that in order for a non-competition clause to be reasonable and valid, its term, its geographical scope and the nature of activities which it prohibits must be limited to protecting the legitimate interests of the party in whose favour it was granted.  Significantly, the Court held that a failure