Contract of sale

Expertises connexes

At first glance, the contract of sale appears to be straightforward: one party, the seller, transfers ownership of property to another, the buyer, in exchange for a monetary price. However, in practice, this legal instrument can be much more complex depending on the nature of the property sold and the specific intentions and expectations of the parties. The importance of clearly defined terms and well-drafted clauses cannot be overstated.

Understanding the Complexities of Contracts of Sale

Sale of Shares or a Business

In cases where the subject of a sale is not a tangible item but shares of a corporation or an entire business, the complexity increases significantly. Such transactions typically involve multiple stages, including a letter of intent, a period of due diligence, and a final purchase and sale agreement. These steps are essential to avoid unpleasant surprises and to ensure that the transaction reflects the true value and legal standing of what is being sold.

Besides the sale price, the parties will also have to negotiate and agree on various clauses of the contract of sale, including the seller’s representations, the issue of sales taxes, the issue of accounts receivable, indemnification provisions, non-competition or non-solicitation clauses, etc.

Sale of Movable or Immovable Property

If the ownership of property being sold is a movable or immovable property, it will also be necessary to include several clauses aimed at clarifying the intention of the parties on all aspects of the sale. In case of doubt about the interpretation of the contract, the court will have to rely on all the relevant elements submitted to it in order to determine the common intention of the parties, the outcome of which being sometimes uncertain.

Legal Obligations of the Seller: Guarantee of Quality and Ownership

The parties to a contract of sale must be aware that the law provides for some default rules pertaining to seller’s obligations, including the obligation of quality, which is incumbent upon the seller who must guarantee that the property is sold free of latent defects. A buyer claiming that the sold property has a latent defect shall give notice in writing of the defect to the seller and then prove that his claim meets each of the criteria provided for by law.

Similarly, subject to limited exceptions, the seller is also bound by the obligation to guarantee the right of ownership, that is to guarantee that the property is free of any right (for example, a mortgage that has not been cancelled), to guarantee that there is no encroachment on his part (for example, a hedge that extends onto the neighbor’s property), to guarantee that the property sold is not in violation of public law restrictions (for example, a garage that would have been built without a permit in violation of a municipal by-law), etc.

Bernier Fournier: Expertise in Contracts of Sale and Litigation

Based on your needs, Bernier Fournier’s professionals can help you, advise you and even take charge of all the steps leading to the sale of shares or of a business, including both the negotiation and the drafting of the letter of intent, the closing agenda, the bill of sale and the corporate resolutions.

Bernier Fournier’s team of experienced lawyers is frequently called upon to represent clients before the courts in contracts of sale matters, whether in a recourse for payment of the purchase price, a hypothecary recourse, an action for execution of title, a request for annulment of the sale, a recourse for latent defects or a recourse concerning the guarantee of the right of ownership. Whether you are a buyer seeking to assert your rights or a seller needing to defend a claim, our legal team is ready to assist you with strategic, personalized, and professional support throughout the transaction or litigation process.