Non-Compete Clauses: What’s Reasonable?

This month, our Managing Partner, Carrie Ritchie contributed to the Toronto Law Journal and explored some of the case law and what has been found to be enforceable in Ontario for non-compete clauses following a business sale.

“In 2024, the Ontario Court of Appeal provided additional commentary and guidance for non-competition provisions in the context of the purchase and sale of a business in Dr. C. Sims Dentistry Professional Corporation v. Cooke. Non-compete provisions are a common restrictive covenant in the sale of a business. Many business owners rely on these provisions when they purchase a business to ensure the vendor is not setting up a new business close-by and in direct competition to the one they just sold. In the Dr. Sims case, the Court of Appeal affirmed the decision of the trial judge that a 5-year 15 kilometer non-compete provision was reasonable in the context of the sale of a dental practice and therefore enforceable with its terms. This article will explore the context of that case, the principles it affirmed, and some examples of other cases where the terms of a restrictive covenant were found to be enforceable. This article will only address the context of restrictive covenants in the sale of a business and will not address restrictive covenants in the employment context.”

The full text of the article can be found here: Read the full article.

This update is not intended to provide legal advice, but to high-light matters of interest in this area of law. If you have questions or need assistance in navigating the sale of a business, please contact Carrie Ritchie at carrie@ritchiesmyth.com.