Q. When are restraint of trade provisions too onerous for enforcement?

A. Overreaching employment terms will not stand in court.

In Mercury Marine Ltd. v. Dillon (1986), 56 O.R. (2d) 266, 30 D.L.R. (4th) 627, Henry J., on an application for an interlocutory injunction, considered the covenant given by a distributor of outboard motors that, for a period of 18 months, he would not be employed or render services to any third party who was a competitor of the plaintiff, or any third party where trade secret information might be useful. Henry J. concluded that the covenant was not reasonable because there was no territorial limit. On the issue of balance of convenience, he held against the plaintiff since the defendant's livelihood was at stake.

In Crain-Drummond Inc. v. Hamel, Charron J. considered a restrictive covenant given by a sales representative in which he agreed that for a period of one year after departure, he would not engage in any business carried on by the plaintiff in the territories in which he had been assigned as sales representative and would not solicit customers of the plaintiff in those territories. Charron J. concluded that, while the plaintiff arguably had a proprietary interest entitled to protection, she thought it unlikely that a court would enforce the covenants in the broad fashion in which they were drawn. She dismissed the application for an interlocutory injunction.

In Jet Print Inc., Nordheimer J. denied an interlocutory injunction against printing and sales employees who had covenanted, for a period of two years, to not solicit or perform services for any client for two years. "Client" was defined as those currently existing, those who existed for the year prior to termination and any prospective clients to whom a presentation had been made in the past two years. Nordheimer J. concluded that the covenant would likely be found to be unreasonable because of the length of time given the nature of employment of the defendants and the broad list of "clients".