This paper focuses on restrictive covenants in employment contracts and commercial agreements. It discusses the different interpretations of restrictive covenants in employment contracts compared to business sale agreements. It also sets out the reasonableness criteria for restrictive covenants, and reviews the principles behind the criteria, with references to relevant case law. Additionally, hybrid agreements containing both an employment and commercial element are considered, including how to interpret restraint of trade clauses. Finally, severing unlawful portions of restrictive covenants to render them unenforceable is discussed.

This paper includes sample non-competition, non-solicitation, and confidentiality agreements in the context of both a share purchase agreement and an asset purchase agreement. As well, sample restrictive covenant provisions for employment contracts are also included.

This paper is part of a collection presented at LESA’s Contract Review and Clause Negotiation seminar held in Edmonton on February 15, 2017 and in Calgary on February 23, 2017.