In January 2026, the Quebec Court of Appeal rendered a decision clarifying the state of the law regarding restrictive covenants in commercial contexts[1].

I) FACTS

This case involves two business partners operating in the insurance and investment sectors. The respondent, Groupes financiers Claude Grefford inc. (“Grefford”), primarily conducts its activities as an insurance broker. The appellant, Services financiers Bertrand Lapointe inc. (“Lapointe”), operates in both the investment and insurance fields. The parties are therefore competitors in the insurance sector.

In 2007, they enter into a client assignment agreement (the “Agreement”), under which Grefford “assigned” to Lapointe its clients “[translation] only” for their investment needs. In consideration, Lapointe agrees to share with Grefford the commissions collected from the referred clients.

In 2018, Grefford’s principal client undertakes the annual renewal of its group insurance program. However, Grefford learns that the group insurance contract has instead been awarded to Lapointe. Grefford files for an procedure in damages against Lapointe on the basis that he had breached the Agreement.

II) THE TRIAL JUDGMENT

At first instance, the Superior Court allowed Grefford’s claim[2]. The judge found that the Agreement was in fact a client referral agreement[3], and that the clause providing for the assignment of clients “only” for investment purposes limited Lapointe’s right to compete with Grefford in the insurance field with respect to the referred clients[4].

Because this clause effectively produced the effects of a restrictive covenant, the judge proceeded to analyze its validity[5] in light of the Supreme Court of Canada’s decision in Payette v. Guay[6]. In this regard, the judge noted that “[unofficial translation] a territorial limitation is not an absolute requirement provided that the application of the clause can be circumscribed by targeting a specific clientele.”[7] As for duration, the fact that the term of the Agreement was determinable, rather than fixed, was considered sufficient[8].

Having concluded that the clause at issue was valid and that Lapointe had breached the Agreement, and finding that, but for its conduct, it was more likely than not that Grefford would have retained the insurance contract[9], the Superior Court ordered Lapointe to compensate Grefford, notably for lost commissions.

III) THE COURT OF APPEAL’S DECISION AND ITS SIGNIFICANCE

On appeal, Lapointe argued that the trial judge erred in concluding that the client assignment clause produced the effects of a restrictive covenant. It was also argued that the clause was invalid because the targeted clientele was not sufficiently defined. The Court of Appeal dismissed the appeal.

The Court of Appeal endorsed the Superior Court’s reasoning, reiterating that “[unofficial translation] the absence of a territorial limit does not pose a problem where the targeted clientele is clearly circumscribed.”[10] Furthermore, the Court rejected the argument that the clientele was insufficiently defined. Like the trial judge, it concluded that the clause concerned only the “assigned clients” from Grefford, such that the clientele was sufficiently circumscribed[11]. Ultimately, it found that no reviewable error had been committed[12].

This decision may have significant implications in Quebec law by confirming two principles.

First, it reiterates that a restrictive covenant need not take the traditional form of a non-compete or non-solicitation clause. In this case, a clause included in a referral agreement, providing for the assignment of certain clients for specific services, did in fact constitute a restrictive covenant. In other words, it is not the form, but rather the effects of a clause that subject it to a reasonableness analysis under the principles set out in Payette.

Second, the decision dispels jurisprudential uncertainty regarding the necessity of including a territorial limit in clauses that may be characterized as client protection clauses, that is, those that limit competition only with respect to identified clients. This uncertainty stemmed in part from the distinction drawn by the Supreme Court in Payette between non-compete clauses – which require a territorial limitation – and non-solicitation clauses, for which no territorial limitation is generally required. This is therefore the first Court of Appeal decision affirming the validity of client protection clauses preventing business with specific clients, without any territorial limitation.

Me Dominique Ménard, Me Christophe Savoie, Me David Joanisse, and Me Émilien Morin-Lévesque represented the respondent, Groupes financiers Claude Grefford inc., before the Quebec Court of Appeal.

[1] Services financiers Bertrand Lapointe inc. c. Groupes financiers Claude Grefford inc., 2026 QCCA 98 (« C.A. Judgement »).

[2] Groupes financiers Claude Grefford inc. c. Services financiers Bertrand Lapointe inc., 2024 QCCS 2986 (« Judgement on appeal »)

[3] Ibid., par. 53.

[4] Ibid., par. 90.

[5] Ibid., par. 115 à 127.

[6] Payette c. Guay inc., 2013 SCC 45 (« Payette »).

[7] Judgement on appeal, par. 117.

[8] Ibid., par. 122.

[9] Ibid., par. 172.

[10] C.A. Judgement, par. 11.

[11] Ibid, par. 21-22.

[12] Ibid.