Can I dispute the inventory figures after a business sale closes?

Inventory may be counted and valued around closing, and a figure that looked right on closing day can look wrong once the shelves are checked. Whether you can challenge it depends on your agreement first and on the law second. The agreement may set its own process, and that process may have a shorter deadline than any court time limit, so find it before anything else.

Start with the agreement

• The counting method and the basis on which stock is valued.
• The date by which you must object, and whether the objection must itemize what you dispute.
• Who decides items the parties cannot settle, and whether any holdback is tied to it.

The page on how inventory is valued in a business sale explains the valuation side of those clauses.

The statutory time limit

Ontario’s Limitations Act, 2002 says that, unless the Act provides otherwise, a proceeding must not start after the second anniversary of the day the claim was discovered. British Columbia’s Limitation Act says that, subject to the Act, a court proceeding must not be commenced more than 2 years after the day the claim is discovered. Alberta’s Limitations Act gives a defendant who pleads it immunity if the claimant does not seek a remedial order within 2 years after the date the claimant first knew, or in the circumstances ought to have known, of the injury, that it was attributable to the defendant’s conduct, and that it warrants a proceeding, or within 10 years after the claim arose, whichever period expires first. Each statute defines discovery and has its own exceptions, and other provinces run their own regimes.

Agreements can change the clock

In Ontario, section 22 of the Act lets parties to a business agreement vary or exclude a limitation period if the agreement was made on or after October 19, 2006, with exceptions for certain periods. Section 11 says that if the parties have agreed to have an independent third party resolve the claim or assist them in resolving it, the periods in sections 4 and 15 do not run from the date the agreement is made until an event the section lists. Read your agreement for any clause that shortens or extends the time to claim.

Keep the evidence

Keep the closing count sheets, supplier invoices, the closing statement and any messages about the figures, and note the date you first noticed the difference. A lawyer can then tell you which deadline governs and whether the agreement’s process or a claim fits better.