Is a non-compete enforceable if the person who signed it was never paid anything for it?

The rule: a promise needs its own consideration

No statute displaces this; it is ordinary contract-formation doctrine at common law, the same doctrine that governs every other contract in Canada. A promise is only enforceable if something of value was given for it, and that something has to be given at or around the time the promise is made. A payment already made under a separate, already-performed agreement cannot retroactively support a later, different promise — Canadian courts treat this as the rule against past consideration.

This matters most where a non-compete is signed by someone who was not a party to the main purchase agreement. A corporate-only non-compete binds the corporation and whoever signed it personally; it does not automatically bind a shareholder’s spouse, even one active day-to-day in the business, unless that spouse separately agreed to their own covenant — and separately received something of value for agreeing to it.

When it changes

The result flips if the later covenant is tied to its own, freestanding payment: a severance amount, a consulting fee, continued access to a customer list, or anything else of value that had not already changed hands under the earlier document. It also flips if the spouse’s obligations were built into the original purchase agreement and priced into the deal from the start, rather than added afterward once the purchase price was already fully paid.

Where this plays out

The Case Files library has two related files. a non-compete the spouse signed but was never paid for is the direct example: a spouse’s standalone covenant, signed six weeks after closing, recited consideration that was never actually paid. a sale non-compete that needed the ancillary restraints defence shows the harder-edged cousin of the same problem — a non-compete that cleared this exact contract-formation test and still needed a separate federal defence.

Sources

• • No statute governs whether a non-compete signature is binding — it is a matter of ordinary contract-formation doctrine (consideration, and the rule against past consideration) at common law.
• • Treadstone Law — personal versus corporate non-competes in an Ontario business sale — on who is a party to which document; the separate question of whether new consideration supported a later promise is addressed here.