What Does an Exclusivity or No-Shop Clause Mean When Selling My Business in BC?

This answer covers the law of British Columbia.

An exclusivity or no-shop clause is a promise that, for a set period, you will not look for, encourage or negotiate with other buyers while this buyer completes its checks and the deal moves toward closing. It usually sits in a letter of intent or similar early document. How long it lasts, what it restricts and what happens if you breach it all depend on the wording you sign.

Before you sign, check the start and end dates, whether the buyer can extend the period, and whether it bars only negotiating or also sharing information with others. Look at whether the clause is legally binding or only a statement of intent, and what the remedy is for a breach, such as a fee or a claim for damages. A lawyer can tell you how a court is likely to read the wording.

Also think about how long the rest of the deal may take, so the period is not shorter or longer than needed. For example, a buyer taking over a liquor licence becomes the deemed licensee only once the LCRB tells both parties the application is administratively complete, and a franchise buyer must receive the disclosure document at least 14 days before signing or paying.