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Employment Contract

KRG Insurance Brokers (Western) Inc. v. Shafron 2009 SCC

The issue was whether a severability clause could save a restrictive covenant from being too wide so as to be unenforceable. There are two types of severance: blue pencil and notional. Blue pencil severance means that the judge can take a blue pencil, draw a line through the offending provisions, and continue to apply the remainder of the words. Notional severance means reading down an illegal feature of the contract so as to render the contract to be in compliance with law. The Court rejected notional severance outright. It held that blue pencil severance should be resorted to sparingly and only if the part being removed was clearly severable, trivial, and not the main purport of the restrictive covenant.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.