Restrictive covenant

A restrictive covenant is a promise not to do something. In land law, it is a registered restriction on the use of land, such as a limit on building height. In business, it refers to non-competition and non-solicitation clauses that restrain trade after a relationship ends.

How BC law treats it

Restraints of trade are presumed unenforceable unless clear and reasonable in scope, duration and geography (Shafron v KRG Insurance Brokers (Western) Inc, 2009 SCC 6), with more leniency on the sale of a business (Payette v Guay inc, 2013 SCC 45). A registered land covenant may be modified or cancelled under Property Law Act, RSBC 1996, c 377, s. 35 on statutory grounds such as obsolescence.

What it means for your business

Check title for registered covenants before buying land, and draft employment and sale covenants narrowly so they can be enforced.

Risks and common mistakes

An overbroad non-compete will likely be struck out entirely rather than narrowed by the court.

For the full explanation, see our entry on Restrictive covenant.

General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.