There are two co-owners, A and B, of a federal corporation C in Canada. B has a side job at a Canadian company D which has a non-compete clause in the contract. C and D do in fact compete. If a legal case is made, is it person B or corporation C that can be sued? And can A be held liable in any way?

1 Answer 1


Only parties to the contract can sue for breach of the contract

In the situation you describe, the contract is between B and D so only B can be sued for its breach.

However, ...

There is a tort of inducing breach of contract which is not often litigated. Under this tort, if either A or C were aware of B's contract with D (C is almost certainly aware) and they induced B to break that contract, D can sue them for damages.

  • You wrote "so only D can be sued for its breach". Did you mean "so only B can be sued for its breach"?
    – Favst
    Nov 25, 2019 at 15:52
  • While "inducing breach of contract" may make up a tiny share of the overall case load of the courts, if you have a practice that involves a lot of business to business disputes, commercial litigation, and employment disputes with senior employees and officers of businesses, as I do, this tort comes up on a quite frequent basis. I usually have at least one or two cases pending at any time in which this is one of multiple claims in each case being litigated. Certainly, it is much more common, for example, than intrusion on seclusion, defamation, or physical assault and battery in my practice.
    – ohwilleke
    Dec 26, 2019 at 19:44
  • Some permutation of the tort of civil conspiracy is another way that claims like this could be litigated against the company, and/or co-owner. Theft of trade secrets would also be a common claim in the right circumstances.
    – ohwilleke
    Dec 26, 2019 at 19:45

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