The Non-Compete That Would Not Have Survived a Challenge

The situation

Elena drove buses for the city. Sandro ran a small landscaping crew, mowing lawns and doing seasonal cleanups for maybe thirty regular residential clients across Scarborough. For two years they had talked about buying an established landscaping business rather than continuing to build Sandro's one-truck operation client by client. In the spring, an opportunity came up: a Scarborough landscaping company with a loyal customer base, two crews, and equipment already in place, priced at roughly $420,000.

The seller, Huong, had built the business over almost fifteen years and was retiring to spend more time with grandchildren. Huong seemed genuine about wanting the business to land with someone who would look after the existing clients, and the deal terms were otherwise reasonable: a fair multiple of earnings, a short transition period where Huong would introduce Elena and Sandro to key clients, and financing arranged through their bank for about $300,000 of the purchase price, with the rest coming from savings and a loan from Sandro's parents.

The purchase agreement, drafted by the seller's lawyer, included a standard-looking clause: Huong agreed not to compete with the business or solicit its clients for a period after closing. Elena and Sandro read it, felt reassured, and were ready to sign. Before they did, they brought the agreement to our office for a review, mostly expecting a formality.

What the review found

The non-compete and non-solicit clause was the first thing that stood out, and not because it was missing — because it was written far too broadly to actually protect the thing Elena and Sandro were paying for.

A restrictive covenant is a promise in a contract that limits what one party can do afterward — here, a promise from Huong not to start a competing business or take clients from the one being sold. Ontario courts treat these clauses with real suspicion, because they restrict a person's ability to earn a living. A court asked to enforce a restrictive covenant against someone will only do so if it is reasonable in three dimensions: the geographic area it covers, the length of time it lasts, and the scope of activity it restricts. If any of those three is broader than what is genuinely needed to protect the business being sold, a court can refuse to enforce the whole clause rather than narrow it down to something fair. In practice, that means an overreaching non-compete is often worth exactly nothing — the seller could ignore it, and if the buyer tried to enforce it, the buyer could lose.

The clause Huong's lawyer had drafted restricted Huong from any involvement, direct or indirect, in landscaping, lawn care, snow removal, or related outdoor services anywhere in the Greater Toronto Area, for a period of five years. It also barred Huong from any contact with anyone who had ever been a client of the business, not just current clients, and from working for any competitor in any capacity, including as an employee mowing lawns for someone else.

Each of those elements was a problem on its own, and together they made the clause fragile. A five-year restriction on ever working in landscaping again, across the entire GTA, went well beyond protecting the goodwill Elena and Sandro were buying — it looked more like an attempt to keep a sixty-something retiree out of the workforce entirely than a reasonable business protection. The client list was similarly overbroad: restricting contact with anyone who had ever been a client, including people who had used the business once years earlier and never returned, swept in relationships that had no remaining value to protect. And barring Huong from working as an employee for a competitor, rather than just from starting or owning one, restricted an activity that posed little real threat to the business Elena and Sandro were buying.

Under the Ontario approach to these clauses, a court reviewing this language would likely find the whole restriction unreasonable and unenforceable, rather than trim it down to something workable. That would leave Elena and Sandro having paid, in part, for a promise that turned out to protect nothing. If Huong changed course after retirement — perhaps got restless after a year and started a small operation nearby, or simply mentioned to old clients that a new one existed — Elena and Sandro would have no real recourse.

What we did

1. Explained the risk in plain terms before touching the contract. Elena and Sandro needed to understand that the clause looked protective but likely was not, and why a court might strike an overbroad covenant entirely rather than fix it for them. That context mattered for the negotiation that followed — this was not a minor wording tweak, it was closing a real gap in what they were buying.
2. Identified what actually needed protecting. The business's value was concentrated in a defined set of current residential and small commercial clients across specific Scarborough neighbourhoods, and in the fact that Huong had personal relationships with many of them. That was the goodwill Elena and Sandro were paying for. A restriction reaching into unrelated services, distant geography, or people who were never really clients did nothing to protect that value — it just made the clause easier to challenge.
3. Drafted a narrower, defensible replacement. The revised clause limited the non-solicit to clients who had used the business within the two years before closing, limited the non-compete geographically to Scarborough and the immediately surrounding area rather than the whole GTA, shortened the term to two years, and restricted Huong from owning or operating a competing business rather than from any employment in the industry at all. Each change was tied to a specific reason a court could weigh — current client relationships, the actual service area, a period long enough for the business to become established under new ownership without being punitive.
4. Took the revised clause back to Huong's lawyer with the reasoning attached. Rather than simply asking for a narrower clause, we explained why the original version put both sides at risk: if it were ever challenged and struck down, Huong would have no binding restriction at all, which was not in Huong's interest either if the parties wanted the deal to actually mean something. Framing the change as making the clause enforceable, not weakening it, made the conversation more collaborative than adversarial.
5. Reviewed the rest of the agreement for related gaps. A confidentiality provision covering client information and business records was strengthened, and a short transition period was formalized in writing, since goodwill often depends as much on a smooth handover of client relationships as on the paper restriction against competing.

The outcome

Huong's lawyer agreed to the revised terms within about a week, with only minor wording changes. The final clause restricted Huong from owning or operating a competing landscaping, lawn care, or snow removal business within Scarborough and the immediately adjacent area for two years, and from soliciting any client who had used the business in the two years before closing. Both restrictions were tied directly to the value Elena and Sandro were actually purchasing, which gave the clause a real chance of holding up if it were ever tested.

The deal closed roughly six weeks later at the originally agreed price of about $420,000, financed with roughly $300,000 through their bank, a family loan of about $80,000, and the remainder from their own savings. Huong completed the transition period as planned, personally introducing Elena and Sandro to several longtime clients, and there was no dispute — Huong retired without competing or soliciting, and the clause was never tested in practice.

That is, in a sense, the quiet ending to this story. Nothing dramatic happened after closing, and that was the point. The value of catching the problem was not in winning a fight later — it was in making sure that if Huong had ever changed course, Elena and Sandro would have had an enforceable agreement standing behind them instead of a clause that looked reassuring on the page and would have evaporated the first time anyone leaned on it.

What you can learn from this