1000 plain-language Q&As about Ontario business purchase and sale. Browse below, or search the whole library.
What happens to your deposit depends entirely on the terms of the purchase agreement and any court order approving the sale process, since receivership…
Read the full answer →Often yes, but only if the purchase agreement is drafted to allow it. Most Ontario share and asset purchase agreements carve fraud, and sometimes…
Read the full answer →Generally, a successful party in Ontario litigation can recover some of their legal costs from the losing side, but usually only a portion of the…
Read the full answer →Not on its own. Plenty of legitimate sellers manage a sale directly — to save on commission, because they already have a specific buyer in mind, or…
Read the full answer →Generally only if your franchise agreement specifically provides for it, and most don't — franchise fees, whether an upfront initial fee or ongoing…
Read the full answer →Yes. A signed NDA governs how information is protected once you choose to share it — it doesn't create any obligation for you to actually disclose…
Read the full answer →Generally, yes. Once the exclusivity period you agreed to in the LOI reaches its stated end, you're typically free to decline a request to extend it,…
Read the full answer →Yes, this is a genuine risk, and it's exactly the kind of thing a well-drafted purchase agreement should anticipate rather than leave to chance. A…
Read the full answer →Generally, yes, if you're continuing the business as a going concern and continuity of employment applies. The Employment Standards Act's job-protected…
Read the full answer →Yes, and this is one of the more subtle ways reported profitability can be misleading without any single number being outright false. If a business…
Read the full answer →No — silence is not a release. A personal guarantee is its own separate agreement between you and the landlord, and consenting to the lease assignment…
Read the full answer →Not automatically. Where a lease is guaranteed by more than one person, those guarantors are typically liable jointly and severally, meaning the…
Read the full answer →It depends entirely on how the renewal option is worded and whether it survives assignment. A renewal option is a contractual right created by the…
Read the full answer →This timing overlap needs careful handling, similar to how a lease renewal can collide with a lease assignment. Franchise agreements typically require…
Read the full answer →Sometimes, but it depends on both the agreement and the nature of the claim. Survival periods are contractual deadlines the parties negotiate for…
Read the full answer →Yes — making a specific employee's continued employment (or a signed new agreement with them) a closing condition is a common way for a buyer to…
Read the full answer →Yes — a return-or-destroy obligation is a standard and enforceable term in a well-drafted confidentiality agreement, requiring a buyer to return or…
Read the full answer →Yes, and buyers commonly achieve this through the representations and warranties in the purchase agreement rather than through the working capital…
Read the full answer →Yes, and this is a common and sensible closing condition in a share purchase, precisely because buying the shares means buying the corporation with all…
Read the full answer →If the purchase agreement makes that consent — a landlord's consent to a lease assignment, a franchisor's approval, a lender's consent to a discharge —…
Read the full answer →Where a disclosure document is required and is provided, and it reveals something material the buyer wasn't previously aware of, the buyer generally…
Read the full answer →Not necessarily, and this is an assumption worth being careful about. Even where a specific resale genuinely qualifies for one of the Arthur Wishart…
Read the full answer →In most cases, yes, at least to some degree, because selling a corporation you co-own generally requires cooperation from your fellow shareholder —…
Read the full answer →Payroll remittance obligations for the Canada Pension Plan and Employment Insurance are federal requirements owed by the employer at the time wages…
Read the full answer →In a share purchase, generally yes — a promise the corporation made to an employee, whether documented in a formal plan or a less formal arrangement,…
Read the full answer →It depends on how you bought the business. In a share purchase, yes, generally — a wrongful dismissal claim against the corporation is a liability of…
Read the full answer →In a share purchase, generally yes — if the corporation sponsors a pension plan with an underfunded shortfall, that obligation belongs to the…
Read the full answer →In a share purchase, generally yes — unpaid WSIB premiums are a debt tied to the corporation's account, and since you now own that corporation, the…
Read the full answer →A restaurant's public health inspection history is tied to the premises and the operator on record, and a change of ownership doesn't erase it from…
Read the full answer →Changing the concept of a restaurant after a sale can affect both the lease and the liquor licence, and the two need to be checked separately rather…
Read the full answer →Whether you inherit the seller's supplier and delivery contracts depends heavily on how the deal is structured. In a share sale, the operating…
Read the full answer →Yes, this is a real risk, particularly where the restructuring's main apparent purpose is reducing tax on a sale that's already substantially arranged,…
Read the full answer →They can, and often do, but whether they must depends again on how the sale is structured. In a share sale, the corporation that sold the original…
Read the full answer →Supplier rebate arrangements and customer loyalty programs are both contractual relationships, not physical assets, so whether they continue after a…
Read the full answer →Yes, and you should insist on it if it isn't offered with enough time. Lawyers typically prepare a final statement of adjustments, along with any…
Read the full answer →Generally, yes — a data room is typically controlled by the seller, and access is usually granted at the seller's discretion rather than as an…
Read the full answer →The risk isn't automatic, but it changes what your due diligence should focus on. A business that's been listed a long time without selling might…
Read the full answer →Generally, buying specific assets from a company doesn't make you personally responsible for its unpaid supplier debts — those obligations belong to…
Read the full answer →The main risk is assuming that "leaving it behind" always works exactly as the purchase agreement says. In an asset purchase, liabilities you don't…
Read the full answer →The main risk isn't that the word becomes meaningless — it's that leaving it undefined shifts the real work of interpreting it from the negotiating…
Read the full answer →The real risk isn't usually that the business becomes unsellable — it's that your options narrow and your leverage shrinks. Planning early gives you…
Read the full answer →Yes, there's a real conflict-of-interest risk, because a broker representing both sides can't fully advocate for the best possible price and terms for…
Read the full answer →Yes, it's worth treating deliberately rather than allowing by default. A general confidentiality agreement may not clearly address photographs or…
Read the full answer →Yes, and this is one of the more common and entirely avoidable mistakes sellers make. Because the classic error with LOIs is misjudging which parts are…
Read the full answer →This is generally the wrong tool for the outcome you're describing. A rollover under the federal Income Tax Act lets you transfer property — including…
Read the full answer →Mechanically, a rollover can still be filed after negotiations have begun, but doing it once a sale is already underway raises real concerns that doing…
Read the full answer →Yes, and in most cases you should — there's no requirement to change how you operate the business simply because you're exploring a sale, and…
Read the full answer →It is possible, though the market for representations and warranties insurance in Canada has traditionally been more active on larger transactions, and…
Read the full answer →It depends on how the purchase agreement and the insurance policy are structured together, since this is a negotiated feature rather than an automatic…
Read the full answer →There is no single answer, since this is genuinely a fact-specific cost-benefit question rather than something with a standard outcome across all…
Read the full answer →Announcing a pending sale to a landlord or staff before it's actually finalized creates real practical exposure if the deal then falls through, since…
Read the full answer →It depends on how broadly the sandbagging clause is written. A "pro-sandbagging" clause lets a buyer bring an indemnity claim for a breach of a…
Read the full answer →Possibly, but it depends on what "some of the assets" actually means in your deal. The election under the Excise Tax Act is available where the buyer…
Read the full answer →It can genuinely change the tax result, not just shuffle paperwork between buyer and seller, when accounts receivable are sold as part of a business…
Read the full answer →It can apply to a transfer of business assets, not only shares, but only in a specific setting: the rollover under the federal Income Tax Act defers…
Read the full answer →This is a priority dispute among the creditors themselves, and it generally doesn't affect a buyer once a proper sale has closed. Ontario's personal…
Read the full answer →This should be addressed directly in the lease assignment agreement or the purchase agreement itself — either the existing security deposit held by the…
Read the full answer →The broad approach is similar, but the details are governed by a different regulator with its own expectations, so treating an accounting practice sale…
Read the full answer →Yes — a gradual sale is a common structure in Ontario business sales, and it usually takes one of a few forms. You might sell a minority stake first…
Read the full answer →Yes — nothing in Ontario law requires you to use a broker to sell your business, and finding your own buyer through your own network, direct outreach,…
Read the full answer →A strong year is generally the better time to start a sale process, because buyers weigh recent performance heavily, and a business performing well…
Read the full answer →This depends heavily on what's actually happening at your location if the agreement has technically expired — whether you're operating under a renewed…
Read the full answer →Generally, no, not as a matter of your own unilateral choice — most franchise agreements treat the territory and the location as bundled together as…
Read the full answer →An existing default makes selling considerably harder, and it's a serious issue to resolve, or at least fully disclose, before approaching the…
Read the full answer →Yes, selling a single location while keeping the others is a common and workable structure, generally handled as a partial asset sale of that one…
Read the full answer →No, not as a general matter. Client files belong, in a real sense, to the client, and a lawyer's duty of confidentiality doesn't disappear just because…
Read the full answer →Yes, and this is a fairly common structure — selling a specific division, product line, or set of assets while keeping the rest of the business under…
Read the full answer →Yes, you're generally free to sell your own shares for whatever price you choose, including well below fair market value — Ontario corporate law…
Read the full answer →For a genuine, arm's-length sale, what the buyer chooses to do with the company afterward — including winding it up — generally doesn't reach back and…
Read the full answer →Yes. As the owner, you're generally free to decide who buys your shares or business assets, and there's no legal requirement to include all your…
Read the full answer →The general approach is similar, though a veterinary practice is governed by its own college with its own expectations, so the two shouldn't be treated…
Read the full answer →Most purchase agreements require the seller to disclose pending or threatened litigation, so an undisclosed lawsuit that predates your purchase…
Read the full answer →What happens depends on how important that specific document is to the deal. If it's a genuine closing condition — something the buyer is entitled to…
Read the full answer →Yes, and this is both a sensible and commonly used approach. A non-compete can, and generally should, expressly exclude a specific existing business or…
Read the full answer →Once the purchase agreement itself is signed and unconditional, a seller generally can't simply refuse to close because they've changed their mind —…
Read the full answer →Often yes for a third-party claim, though this is a negotiated feature of the indemnity procedure rather than an automatic right. Because the seller…
Read the full answer →Yes. Indemnities in a business purchase and sale are not one-directional, and it is common for the purchase agreement to include a reciprocal indemnity…
Read the full answer →Yes, if the note or purchase agreement includes a late-payment or default interest provision, since this is entirely a matter of what the parties…
Read the full answer →Yes. An unsecured promissory note leaves the seller as just another unsecured creditor if the buyer defaults, so it is common for sellers to negotiate…
Read the full answer →Only if the purchase agreement actually says so. Contact lists, customer databases, and similar business records are commonly included among the…
Read the full answer →It depends entirely on whether the purchase agreement includes a financing condition protecting the buyer, since there is no automatic right to walk…
Read the full answer →Yes, this is a common carve-out in an asset purchase. Accounts receivable can simply be excluded from the assets you're buying, leaving the seller…
Read the full answer →If the deal has already closed, your main route is generally an indemnity claim under the purchase agreement for breach of the seller's representations…
Read the full answer →Yes, and it can matter significantly. An honest but inaccurate representation — a negligent or innocent misrepresentation — is typically addressed…
Read the full answer →No — shares only exist for a corporation, so if the seller has been operating as a sole proprietor or an unincorporated partnership, there's no share…
Read the full answer →It depends on what "never registered properly" actually means, since not all software intellectual property requires formal registration to exist.…
Read the full answer →This is a genuinely difficult scenario. Courts generally respect a corporation as a separate legal entity from the people behind it, and only look past…
Read the full answer →Usually not, if the non-compete is drafted the way most are. Ontario purchase agreements typically restrict the seller from competing "directly or…
Read the full answer →If the purchase agreement, or a related agreement, includes a valid non-competition covenant from the seller, operating a similar business nearby in…
Read the full answer →Yes, often. A corporation's bankruptcy under federal insolvency law generally deals with the corporation's own debts, but it doesn't automatically…
Read the full answer →This raises both a priority problem and a misrepresentation problem, and they need to be looked at separately. On priority, Ontario's personal property…
Read the full answer →A seller's protection here comes almost entirely from what is negotiated and written into the earn-out provisions before closing, rather than from any…
Read the full answer →Yes. There is no legal rule requiring fundamental representations to carry a higher, let alone unlimited, indemnity cap — that pattern is common market…
Read the full answer →Yes. Nothing in Ontario law requires an indemnity cap in a business purchase and sale, so a seller is free to refuse one, and some do, particularly…
Read the full answer →Generally no, if the escrow is properly structured, since release is not supposed to be within either party's unilateral control in the first place. In…
Read the full answer →Yes. Subordinating a vendor take-back note behind a buyer's bank loan is not required by law — it is a negotiated arrangement, usually documented in a…
Read the full answer →If delivering this kind of access was part of what the seller was required to hand over under the purchase agreement — commonly listed as a closing…
Read the full answer →This depends on whether transition assistance was an actual contractual obligation — a specific covenant in the purchase agreement or a separate…
Read the full answer →If the domain name and social media accounts were included among the purchased assets, or were the subject of an express post-closing transfer covenant…
Read the full answer →It depends entirely on what security the seller actually took at closing, not just on the promissory note itself. A vendor take-back note alone,…
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