- " These are private contractual terms, not a matter of general law, and they can be considerably shorter than you might assume.
- Discoverability generally means the limitation clock starts running from when you first knew, or reasonably ought to have known: - That the loss had occurred - That it was caused by an…
- Ontario's limitation rules include both the general discoverability-based period and a separate, longer "ultimate" limitation period that can apply regardless of discovery, along with…
"How long do I have?" is usually one of the first questions a buyer asks once they suspect a seller misrepresented something about a business purchase. It's also a harder question to answer precisely than most people expect — because in a business purchase dispute, there generally isn't just one clock running. There are usually two, and they don't necessarily start or end at the same time.
This article explains the two different kinds of deadlines you need to think about, why the exact length of Ontario's general limitation period isn't something to calculate yourself, and why waiting is risky even if you think you still have time.
Two Different Clocks: Contractual Deadlines vs the General Limitation Period
The purchase agreement's own deadlines. Many purchase agreements set specific, contractually negotiated time limits for making an indemnity claim or drawing on a holdback — sometimes called "survival periods." These are private contractual terms, not a matter of general law, and they can be considerably shorter than you might assume. They typically start running from closing, not from when you discovered the problem.
Ontario's general limitation period for civil claims. Separate from anything the contract says, Ontario law imposes its own limitation period on lawsuits generally, including misrepresentation claims. Unlike a contractual survival period, this one is generally tied to discoverability — when you knew, or reasonably ought to have known, that you had a claim worth pursuing — rather than automatically starting on closing day.
Missing either clock can be fatal to an otherwise valid claim, which is exactly why both need to be checked as soon as you suspect a problem, not once you've decided to act on it.
What "Discoverability" Means in Practice
Discoverability generally means the limitation clock starts running from when you first knew, or reasonably ought to have known:
- That the loss had occurred
- That it was caused by an act or omission of the seller (or someone connected to them)
- That a legal claim would be an appropriate response
This is not the same as the closing date, and it's not necessarily the date you first felt uneasy about the numbers. Courts look at what a reasonable buyer in your position would have understood, and when — which is a fact-specific inquiry, not a fixed formula.
Why the General Limitation Period Is Not a Number You Should Calculate Yourself
Ontario's limitation rules include both the general discoverability-based period and a separate, longer "ultimate" limitation period that can apply regardless of discovery, along with various exceptions and qualifications depending on the type of claim. Because getting this calculation wrong can permanently bar an otherwise strong claim, this is squarely a question to bring to a lawyer with your specific facts and timeline, rather than something to estimate from a general summary — this article deliberately does not state a specific number of years, because the precise period and its starting point depend on facts a lawyer needs to review directly.
Why Waiting Is Risky Even If You Think You Have Time
- Evidence degrades. Emails get deleted, employees with relevant knowledge move on, and memories fade.
- A seller who becomes aware you're investigating may take steps that make recovery harder — winding down a corporation, moving assets, or simply becoming less cooperative.
- Some contractual notice periods are considerably shorter than the general limitation period, and can expire while you're still deciding what to do.
- The discoverability analysis itself can become harder to argue favourably the longer you wait after first suspecting a problem, since a court will ask what you knew and when.
What to Do as Soon as You Suspect a Problem
- Note the date you first noticed something seemed wrong, and what specifically prompted it — this detail matters for a discoverability argument later.
- Pull your purchase agreement and check for any contractual notice or claims deadlines tied to indemnities or a holdback.
- Gather your evidence while it's fresh, even before you've decided whether to pursue a claim.
- Get a lawyer's assessment of both clocks — contractual and general — as early as possible, not after you've done your own research and decided you still have time.
- If a deadline is approaching, don't wait for the analysis to be "complete" before getting help; a lawyer can often take protective steps while the fuller picture comes together.
Frequently asked questions
Does the limitation period start on the day I signed the purchase agreement, or the closing date?
Neither necessarily. For a discoverability-based claim, the clock generally starts when you knew or ought to have known about the problem, which is often well after signing or closing. But a contractual survival period in your purchase agreement might specifically use the closing date as its starting point — the two questions have different answers and need to be checked separately.
I found the problem two years after closing — is it automatically too late?
Not automatically. It depends on when you reasonably could have discovered it, what your purchase agreement's own deadlines say, and which type of claim you're pursuing. This is exactly the kind of question that needs a lawyer looking at your specific timeline rather than a general rule of thumb.
If my agreement has a short survival period that's already passed, am I completely out of options?
Not necessarily — a survival period passing may close off an indemnity claim under the agreement without necessarily closing off every possible legal avenue, depending on the facts and how the agreement is worded. This needs a careful, agreement-specific review.
Should I just wait until I'm sure before getting a lawyer involved?
No. Given how much a discoverability analysis depends on timing, and how contractual deadlines can run out silently in the background, getting advice promptly — even before you're certain you want to pursue anything — is almost always the safer move.
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