Two sister companies sign their first cross-border supply deal days before a holiday closing

The situation

'Can we just sign what they sent us and fix the details later?' Zainab asked, on a call four days before the agreed closing date. The answer to that question, and what it took to get to a better one, is the story of how a small Midland company signed its first real cross-border sales agreement without giving away more than it needed to, on a timeline that left almost no room to get it wrong.

Zainab and Shazia, both registered nurses, had started a home healthcare equipment supply business in Midland years earlier, selling mobility aids and monitoring equipment to clinics and home care agencies across the region. As the business grew past the low seven figures in annual revenue, they had split their operations into two companies under the same ownership: one that handled sales and client relationships, and a second that handled import logistics and warehousing, structured that way mainly for insurance and liability reasons after an early supplier dispute had exposed both sides of the business to the same claim at once.

A distribution opportunity in the United States had come together faster than either of them expected. Manuel, who ran a regional medical supply distributor south of the border, had found their product line through an industry trade show and wanted an ongoing supply arrangement rather than a one-off order. The two sides negotiated pricing and volume by email over several weeks and reached a letter of intent, with a target closing date set to fall just before a long weekend on the US calendar, so Manuel's company could start selling the new product line at the start of the following month, in time for a seasonal promotion his team had already begun advertising to their own customers.

The draft supply agreement Manuel's team sent over looked complete at a glance — pricing schedules, delivery terms, minimum order volumes, even a schedule of product specifications matched line for line to the letter of intent. It was only when Zainab's bookkeeper tried to build a cash flow projection off it that a gap became obvious: the contract said nothing about which country's dollar the prices were quoted in, which country's law would govern a dispute, or what would happen if a shipment was rejected at the border. With the closing date days away, Manuel's marketing already committed to the launch date, and his team already treating the deal as settled, there was very little time to fix it without appearing to walk the deal back at the worst possible moment.

The legal question

The real question behind Zainab's was not whether the agreement could be signed as drafted — it could be, and nothing would stop the two sides from doing that. The question was what would happen the first time something went wrong: a late shipment, a currency swing, a disputed invoice, a product that failed an inspection at the border. Without clear terms, both sides would be guessing, and guessing tends to favour whichever party has the resources and the home-court advantage to make a dispute expensive for the other.

Currency was the first issue. The draft priced goods in dollars without saying whose. Over the life of an ongoing supply relationship, even modest exchange rate movement between the Canadian and US dollar can turn a profitable order into a loss if the contract does not fix which currency governs and how conversion works for late payments or credits. For a company the size of Zainab and Shazia's, a few percentage points of currency drift across a year of shipments was a meaningful number against their margins, not a rounding error they could absorb without noticing.

Governing law was the second and larger issue. If a dispute arose and the contract was silent, a court in either country might have to decide, as a threshold question before it even reached the substance of the dispute, whose law applied and whose courts had authority to hear the case — a fight that can cost more in legal fees than the underlying dispute is worth, and one that can drag on for months before the real disagreement is even addressed. For a Canadian company being sued or suing in an unfamiliar US jurisdiction, that uncertainty is a real business risk, not a technicality to be cleaned up later. The same was true in reverse for Manuel's company if it ever needed to enforce the agreement against a Canadian supplier, which meant a well-drafted clause actually served both sides, not just the one raising it.

The third issue was structural: because sales and logistics sat in two separate companies under common ownership, the agreement needed to be clear about which entity was actually the seller of record, which one bore the risk of goods in transit, and which one Manuel's company would actually be contracting with, and therefore able to sue or be sued by, if something went wrong. Left ambiguous, that gap could have left one company on the hook for obligations it had no practical way to fulfill, or left Manuel's company with a claim against an entity that held none of the relevant assets.

What we did

1. Reviewed the draft agreement against the letter of intent line by line to confirm the missing terms were a genuine oversight rather than a deliberate choice by Manuel's side to leave itself room to maneuver later, which shaped how directly we could raise the gaps with his team without souring a relationship both companies still wanted to protect at closing, and without tipping the negotiation into a fight neither side had time for that week.
2. Drafted a currency clause fixing prices in Canadian dollars with a defined conversion mechanism for any US-dollar payments, so neither side carried open-ended exchange rate risk over the life of the supply relationship and both could forecast margins without guessing at a moving target — a detail that mattered more for an ongoing arrangement than it would have for a single one-off shipment.
3. Added a governing law and dispute resolution clause specifying Ontario law and a defined, lower-cost process for resolving disputes before either side needed to go to court, chosen because it gave the Canadian company a predictable home forum without being so one-sided that Manuel's team would balk at signing days before their own marketing deadline, and because a threshold fight over jurisdiction was the single costliest risk left unaddressed in the original draft.
4. Clarified which of the two companies was the contracting seller and adjusted the delivery and risk-transfer terms so obligations sat with the entity actually able to fulfill them, closing the gap that could have left the wrong company exposed to a claim it had no assets to answer, or left Manuel's company holding a judgment against an entity that held none of the inventory or receivables it needed.
5. Set out a clear rejection and returns process for goods that failed inspection at the border, including timelines, notice requirements, and cost allocation between the two companies, since the original draft left that scenario entirely unaddressed and it was one of the more likely sources of an early dispute given how new the arrangement was and how little history the two sides had to fall back on if something went wrong.
6. Confirmed insurance and liability coverage for goods in transit across the border matched the risk-transfer point actually written into the revised agreement, since a mismatch between when risk passed on paper and when coverage actually applied would have left a gap neither company noticed until a shipment was damaged or lost, at which point it would have been too late to fix cheaply.
7. Sent the revised terms to Manuel's side with a short covering explanation framing the changes as filling gaps rather than renegotiating price or volume, which kept the conversation focused on mechanics both sides actually wanted resolved and avoided reopening commercial terms already agreed weeks earlier, when either company could still have walked away from the table over a number rather than a definition.
8. Coordinated a same-week turnaround with Manuel's team, including a short call between both companies' representatives to walk through the changes plainly rather than leaving it to email alone, where tone is easy to misread under deadline pressure. The goal was to get the revised agreement reviewed and signed before the holiday closing date without either side losing the momentum of the deal or reading silence on either end as second thoughts.
9. Prepared a short internal summary for Zainab and Shazia explaining what each new clause did in plain language, so that when a similar issue came up in a future shipment, either owner could refer back to the agreement and understand the reasoning without needing to call a lawyer for every question, and could explain the terms confidently if Manuel's team, or a future US buyer, ever asked why a particular clause existed.

The outcome

The agreement closed on the original target date, with the currency, governing law, risk-of-loss, and returns terms all resolved before signature rather than left for a future conversation. Manuel's team accepted the revisions without pushing back on the commercial terms already agreed, and the first shipment under the new arrangement went out within the following month, in time for the seasonal launch his team had already been promoting.

The company did give up a small amount of time it would rather have spent preparing the first shipment, and the closing conversation was more tense than either side expected for what had looked, on the surface, like a routine signing. But the alternative — signing a contract silent on currency and jurisdiction, and discovering the gap only after a dispute arose — carried a far larger cost, one that would have landed at the worst possible time, mid-relationship, with product already moving across the border and both companies relying on the arrangement to hold.

Roughly four months into the arrangement, a shipment was in fact held briefly at the border over a labelling discrepancy, a minor issue compared to what could have happened, and the returns and cost-allocation clause the two companies had negotiated resolved it within days rather than becoming its own dispute. Both sides pointed back to that clause afterward as the one that had done the most quiet work.

A year into the arrangement, the two companies used the same contract structure as the template for a second US buyer Manuel's team referred to them, adjusting only the pricing schedule and volume terms. Zainab kept a short internal note on file summarizing why each clause existed and what problem it was written to prevent, so the next cross-border deal would not need to relearn the same lessons under the same closing-week time pressure.

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