Nova Graphic Design Case Summary

The legal issue in this case is whether this non-compete clause in the employment contract between Roxanne and Nova Graphic Designs is enforceable under Canadian contract law. As stated in Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co., despite the presumption that restrictive covenants are prima facie unenforceable, a reasonable restrictive covenant will be upheld. Restrictive covenants are prima facie unenforceable because they create conflict between the freedom to contract and an individual’s freedom to participate in trade. It is in the interest of the public that the exercise of trade be free and encouraged. However, there are exceptions in which if a restraint of trade is reasonable, it is enforceable by law. In determining

Roxanne had worked for Nova since leaving secondary school and she had formed an admirable list of her own clients. Roxanne was also mentored by more experienced graphic designers at Nova. Since Nova trained her with their resources, expertise, and mentors, it is reasonable that they do not want to be training someone who will be their competition and take their clients. The length of the restriction, 12 months, was also reasonable because that time would allow Nova to secure and build their relationship with Roxanne’s previous clients. Although this temporal restriction does interfere with Roxanne’s individual liberty of action and free exercise of trade, this restraint of trade can be allowed because it is a reasonable amount of time. The scope of the activity addressed by the restriction is also reasonable. Although the term “substantially similar” is a bit ambiguous since it does not specify what products and services would be counted as similar in substance to Nova Graphic Design, Nova could argue that this provision is clear and reasonable in this specific case because Roxanne is starting her own graphic design business, which will be providing the exact same type of service as Nova did. Although the other restrictions are clear and coherent, Roxanne could argue that the territorial scope of the restrictive covenant is

In proving the reasonableness of this restriction, Nova must prove that it is first unambiguous because if a restriction is ambiguous, it is not possible to demonstrate that it is reasonable. As seen in the Shafron case, the territorial limits commonly raise questions of severance. The issue now is whether the doctrine of severance may be invoked to resolve an ambiguous term in the restrictive covenant or render an unreasonable geographic scope reasonable. Nova would probably argue that severance could be utilized to bring about the original intention of the parties at the time that contract was signed. Nova could argue that blue-pencil severance could be applied in this case to remove the “land” part of “Torontoland” so that the restriction is just the “Toronto area”. Since the location of GraphixRox is in Toronto, then Roxanne would be in breach of this non-compete clause. However, Roxanne could argue that blue-pencil severance has a very narrow application that does not apply in this instance because blue-pencil severance can only be applied where the part removed is trivial and not a main part of the restrictive covenant. Roxanne would argue that, in terms of the geographic scope, the “land” part of “Torontoland” is very important and not trivial. In addition, this type of severance occurs when both parties