Can I get out of an LOI if the buyer misrepresented themselves?

You may have signed an LOI on the strength of what a buyer told you: that funds were lined up, that they ran similar businesses, that they spoke for the company making the offer. If those statements turn out to be false, the question is whether you can leave. This page covers Quebec law only. Other provinces treat misrepresentation under their own rules, which this page does not describe, so check with a lawyer licensed where the business is based.

What the Civil Code says about fraud

Under the Civil Code of Québec, consent may be vitiated by error, fear or lesion. Error on the part of one party induced by fraud committed by the other party, or with that party’s knowledge, vitiates consent whenever, but for that error, the party would not have contracted or would have contracted on different terms. The Code adds that fraud may result from silence or concealment, so it is not limited to a false statement.

What you can claim

For error occasioned by fraud, the Code lets you claim damages in addition to annulment. If you would rather keep the contract, you can apply for a reduction of your obligation equal to the damages you could claim. Éducaloi adds that you can sometimes cancel a contract when the other party is not performing, but only if strict conditions are met, that in many situations a demand letter (mise en demeure) must be sent before court proceedings, and that you must limit your damages.

Is there a contract to get out of?

Start with the LOI itself. If it says that only some clauses bind, such as confidentiality, and that no sale obligation arises until a definitive agreement is signed, the practical question may be whether to continue at all, not how to be released. Éducaloi notes that a contract can be formed verbally or by email, so a lawyer should read the document and your exchanges together. In the meantime, keep copies of what the buyer wrote and said, and do not sign a definitive agreement until you have resolved the question.