Meunier v. Cloutier, 1984 CanLII 1929 (ON SC)

Cloutier returned to Timmins and purchased a hotel only a block away from the one he had sold to Meunier four years earlier. In doing so, he violated a non-competition clause prohibiting him from participating in the hotel business in Timmins for five years following the sale to Meunier. The original contract required him to pay $50 000 for such a breach as liquidated damages, and Meunier brought this action to recover that amount.

Assume that the plaintiff, Meunier, has not provided any evidence of economic loss. What factors will the court consider in light of Cloutier's argument that the clause was a penalty and should not be enforced? When is a non-competition clause unenforceable?

Analyze according to below format

ISSUE:

What is the question at the heart of the case? The one question, which, once answered, will determine how the judge will decide the case.

RULE(S):

What are the rules of law that you should consider in analyzing the case? Define them, along with any possible defenses.

ANALYSIS:

Relate the facts of the case to the rules of law, in order to answer the questions the parties have. How do the facts meet the definition of the rule(s), or the defense(s)?

DECISION:

Make a decision; decide on behalf of one party or the other, based on your analysis.