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The contract of sale is simple to conceptualize: the seller transfers ownership of property to a buyer for a price in money. However, several clauses are important and may be included in the contract. Depending on the ownership of property being sold, the parties will have to pay particular attention to some elements and exercise more vigilance.
Without a doubt, the sale of shares or of a business deserves serious consideration in order to frame the terms of the contract and avoid making a bad deal. It is often preceded by a letter of intent and then by due diligence. 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.
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 or purchase of shares or 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.
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.
Secondly, 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’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.