When a business is sold and the former owners of the business are restricted from competing directly with the new business, can the new owners enforce restrictive covenants?
Alberta, Canada
The following excerpt is from The Travel Company Ltd. v. Keeling, 2009 ABQB 399 (CanLII):
Restrictive covenants are commonly found when ongoing businesses are sold and the former owners are restricted from competing directly with the new owners. The second commonly encountered restrictive covenant is within employment contracts where a business, particularly one with proprietary information, does not want to lose its ex-employees to competitors, and particularly where knowledge and strengths developed by one employer can be inflicted on that employer, through the new competitive position: Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6 at para 15 [“Shafron”].
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