Ibolya Entered into an Employment Contract with a Toronto Advertising

question 115

Multiple Choice

Ibolya entered into an employment contract with a Toronto advertising firm, VertaNet Ltd. The agreement included a non-competition clause that prevented her from participating in the advertising field in Toronto for five years after termination of her employment. In the event of a breach, the contract provided that Ibolya would have to pay VertaNet the sum of $500,000 as liquidated damages. Ibolya worked for VertaNet for a period of time, then took another job in Vancouver where she worked for four and half years. Six months before the expiry of the five-year period in her VertaNet contract, Ibolya returned to Toronto to take a part-time position at a small advertising firm. Although VertaNet did not suffer any damage, VertaNet sued Ibolya claiming $500,000. What is the likely outcome?

• A) The non-competition clause is likely a penalty and therefore unenforceable.
• B) Although the amount claimed is unconscionable, the clause will be enforced as it is writing.
• C) Non-competition clauses generally are void as not being in the public interest.
• D) Liquidated damages clauses are illegal and therefore void.
• E) Unless the $500,000 had been prepaid, Ibolya has no good defence.

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Definitions:

Graph

A visual representation of data, functions, or equations, typically plotted with an x and y axis to show relationships between different variables.

Ticket Sales

The process of selling admission tickets to events.

Inequality

A mathematical statement indicating that two expressions are not equal, typically involving symbols such as > (greater than), < (less than).

Graph

A diagram representing a system of connections or interrelations among two or more things by a number of distinctive dots, lines, bars, etc.