The utility of a non-compete clause | ScriptaLegal
Personal Law Business Law Packages & Subscriptions
Français About us Create a free account Log in
Interactive legal guides Legal frequently asked questions Legal blog Videos
ONLINE LEGAL DOCUMENTS
Legal blog > Company > The purpose of a non-competition clause

The purpose of a non-competition clause

The difficulty of enforcing a non-compete clause in a contract is inversely proportional to the good faith of the parties.

«Good faith is experienced, but not written»

It frequently happens that certain individuals, after selling their business, do not respect the non-competition clause contained in the sales contract.

A Distributor who sold his business to a Corporation acquires a direct competitor of the Corporation, despite his commitment to not operate a similar distribution business for a period of five years. It should be noted that the Corporation also wanted to acquire this competitor.

The Corporation addresses the Court* and requests compensation for loss of profits. The Court declares that in business, it is "not acceptable to profit from one's bad faith". Indeed, the Distributor, knowing that he was violating the non-competition clause, did not concern himself too much under the pretext that exemplary damages cannot be awarded in Quebec.

The Court orders the Distributor to pay several million dollars to the Corporation. The acquisition was made in violation of the Distributor's commitment and provided him with an advantage in the market that inevitably caused a loss for the Corporation.

It must be remembered that the difficulty of enforcing a non-competition clause is inversely proportional to the good faith of the parties.

*C.A. 500-05-010190-930, 2002-09-09

François Forget, notary and legal advisor as well as the entire Notaire-Direct team, are at your service to ensure the preparation of your legal documents and answer all your legal questions.
It is preferable to ensure that your neighbor's occupation does not encroach on your property
Me François Forget - May 10, 2017
The boundaries of a property are often managed based on a friendly relationship with our neighbors, without paying...
A property right can come to an end if one fails to ensure that they have had beneficial possession
Me François Forget - March 6, 2018
If every good thing comes to an end, a property right can come to an end if one fails to ensure that they have had...
Having a great vacation with the family, not always true!
Me François Forget - December 14, 2016
Having a great family vacation during the holiday season, in warmth and by the seaside..., not always true!

This browser does not support this kind of file. Please download the file to view it: Download the file