Can I sue a seller personally for a broken promise if it was their corporation that sold the business?
Generally no, not automatically. If the seller under the purchase agreement is a corporation rather than an individual, the corporation is the party bound by the representations, warranties, and indemnities, and Ontario law treats a corporation as a separate legal entity from the people who own or run it. That separation is precisely what shields individuals behind a corporate seller from personal liability for the corporation's own contractual promises, absent something unusual.
There are narrower routes around this, most commonly if the individual behind the seller corporation personally signed the agreement as an additional party or guarantor of its obligations, or in the rare circumstances where a court is willing to disregard the corporate structure entirely because it was used as a sham to perpetrate a fraud. Because a corporate seller with limited remaining assets is exactly the collectability risk buyers worry about, buyers negotiating a purchase agreement with an individual behind the corporate seller should consider asking for a personal guarantee or that the principal be added as a party, rather than assuming personal recourse will be available later.
Key takeaways
- A corporate seller's separate legal status generally shields its individuals from its promises.
- Personal recourse usually requires a signed personal guarantee or added party status.
- Piercing the corporate veil is a narrow, fact-specific exception, not a routine remedy.
- Buyers concerned about this risk should negotiate personal protection at signing.