Please note that the information contained herein is NOT legal advice and is provided for educational purposes only. Laws are subject to change and without notice. If you need legal advice, you should seek professional assistance (e.g. make a post on Dynamic Legal Forms).
Are Non-Competes Enforceable?
If you’re searching for a non-compete agreement in British Columbia, then look no further. You absolutely need to check out our Non-Compete Agreement for British Columbia. It’s a lawyer-prepared legal form with tons of free guidance (e.g. video tutorial + written guides).
Now, a big question that often comes up is whether these types of agreements are valid and enforceable. Since non-compete clauses and agreements are contractual, the principles of contract law apply to their validity, interpretation, and enforceability. This means that the provision in an Agreement must be clear and certain enough (i.e. not too vague or missing information) to be enforceable. There’s also an age-old rule of interpretation called contra-proferentum which states that, in the case of an ambiguity, the provision should be interpreted against the party who wrote it. Ouch! Don’t use wishy-washy language, such as “may”; use definitive language such as “must” or “shall”. Finally, don’t provide alternatives in the restrictive clause itself – for example “the non compete clause may last 1, 2, or 3 years”; this will make it unenforceable for vagueness.
Even if a non compete agreement meets substantive requirements, a party could still challenge the agreement on the basis of procedural defects in the way that the agreement was entered into – such as:
- the party to the agreement did not have legal capacity (e.g. they were a minor or mentally incapacitated) to enter into the non-compete or non-solicitation agreement;
- the party was under duress or undue influence;
- the non compete agreement was unconscionable (i.e. substantively and procedurally unfair);
- the party relied on a misrepresentation (e.g. fraudulent, negligent, etc.) made by the other party; or
- the party wanting to rely on the non-compete had fundamentally breached the agreement (and therefore the entire agreement was void).
Now, even if the restrictive covenant can withstand these challenges, the general common law (i.e. judge-made) rule is that they are in restraint of trade and hence contrary to public policy. THEREFORE, THEY ARE PRESUMED TO BE VOID AND UNENFORCEABLE! OUCH! But this general rule has been relaxed such that courts now have a balancing act to determine whether a particular restrictive covenant is valid and enforceable. On the one hand, the courts will look to the public interest in maintaining freedom of trade. On the other hand, the courts will look at restraining this freedom in the interests of a particular person (e.g. the Employer) within reasonable limits. Courts will look at various factors to determine if a restrictive covenant is reasonably necessary to protect the interests of the Employer while at the same time not being injurious to the public. These factors include whether the restrictive covenant is reasonable (e.g. based on geography, time, and proscribed activities), founded on good CONSIDERATION (i.e. benefits such as payment were provided in exchange for the employee agreeing to the restrictive covenant), and not too vague. Courts may be more prone to enforce restrictive covenants where they are needed to protect the proprietary interests of an employer (e.g. trade secrets, confidential information, client base / connections), are limited geographically (e.g. 25 km within the Employer’s office) and in time (e.g. 1 year), and is drafted in clear and certain terms.
Remember: if you’re looking for a British Columbia Non Compete agreement (to be used in the non-employment context), then you should check out our lawyer-prepared legal form + video tutorial + written guides!