Commercial Agreements – Broader Scope Allowed in Restrictions

Commercial Agreements – Broader Scope Allowed in Restrictions

June 1, 2015
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A recent decision in a case called Payette v. Guay Inc. [2013] S.C.J. No. 45, involved a Seller who had sold his business to a third party, and continued to work for the new owners of the business after the deal closed. In the context of evaluating the reasonableness of a commercial “non-solicitation” and “non-competition” clause that formed part of the deal, the Supreme Court of Canada decided that such commercial clauses can be broader in scope than those that govern individual employees in a straightforward employment context.  The Supreme Court further ruled that, unlike non-competition clauses, non-solicitation clauses generally did not need to be territorially limited in scope in order to be considered reasonable, valid, and enforceable.   This decision reversed a Quebec Superior Court ruling that the restrictive covenants did not apply.

What does this mean? The provisions contained in any agreement – be it the sale of a home or business, a marriage, separation, or an employment agreement – should at a minimum be reviewed by a lawyer, if not actually drafted by a lawyer.  Do not attempt to be your own lawyer!  Do what you do best!

Notwithstanding the last few years’ predictions of a slowdown, correction or collapse of the housing market in the GTA, the forecasters and experts continue to be baffled by the on-going strength and staying power of the housing market.  I must admit I was personally of the opinion several years ago that we would see some slowdown and maybe even a slight correction in prices in the housing market in Toronto and the surrounding area but – lo and behold – I was wrong.  I better not rely on my forecasting ability; either I should buy a new crystal ball, or stick to my daytime job as a lawyer.  The table below is an excellent indication of what has happened in the Toronto housing market up to the end of September 2014.

Toronto MLS Sales Activity: Year-Over-Year Summary

2013

2014

% Change

September Year-To-Date Average Selling Price

$520,118.00

$563,813

+8.4%

September Year-To-Date Number of GTA Sales

68,907

73,465

+6.6%

Available Residential Properties

20,194

19,165

-5.1%

Average Market Time

27 days

25 days

Average Selling Price versus Asking Price

98%

99%

Prime Interest Rate – September

3.0%

3.0%

Residential Interest Rate (5 year closed)

3.49%

2.84%

Source: The Toronto Real Estate Board

Of course several factors are at work: continued low interest rates; continued immigration from around the world with a large percentage of immigrants settling in the GTA; continued flow into the GTA of people from other parts of Canada hoping to start their careers, make their fortunes, or be discovered as the next rising (fill in the blank); people from various parts of the world looking to protect their money in a safe and stable political and economic environment (given the seemingly global political and economic uncertainties); the position of Toronto as an economic centre in the world; and finally the fairly recent volatility of the stock markets in the world.  However, with the release of Canada’s inflationary numbers for October and the continued rebound of the U.S. economy, there is a growing sentiment that interest rates will start rising in 2015 and possibly earlier and more rapidly than forecast even in the past several months.  My advice: Do not financially overextend yourself!

Commercial Agreements – Broader Scope Allowed in Restrictions
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