Can I still make a claim after signing off on the closing financials?

Signing off on closing financials can mean very different things. It may confirm a statement of adjustments, accept a working capital calculation, or settle everything between the parties. Each has a different effect on a later claim. Nobody can tell you the result without reading the document and the purchase agreement together, so the first job is to find out which kind of sign-off you have been handed.

What the sign-off may be

Look for words such as full and final, release, waive or final and binding. Check whether the sign-off covers only the price adjustment or reaches other claims. Then see whether the purchase agreement keeps separate rights, such as claims for a breach of a representation, with their own time limits. A sign-off that closes the adjustment may leave those untouched, but only the wording can confirm that.

What the statutes say about time

Ontario’s Limitations Act, 2002, s. 4, says that, unless the Act provides otherwise, a proceeding shall not be commenced after the second anniversary of the day the claim was discovered, and s. 5 explains when a claim is discovered. Under s. 22(5), in a business agreement made on or after October 19, 2006, a limitation period under the Act, other than one established by s. 15, may be varied or excluded; s. 15’s period may be varied, but suspended or extended only as s. 22(4) allows. Alberta’s Limitations Act, s. 7, is different: subject to s. 9, an agreement that expressly provides for extending a limitation period alters it, and one that purports to reduce it is not valid. British Columbia’s Limitation Act has its own basic limitation period in Part 2. Ask your lawyer which province’s law applies to your claim.

Before you sign

Have your accountant review the figures and your lawyer review the wording. List in writing any issue you already know about, with the date you learned of it. Ask whether the sign-off can say that it does not release other claims. If you suspect a misstatement, tell your lawyer straight away, because a limitation clock may already be running.

If you have already signed

Do not assume the door is closed. Ask your lawyer to read the sign-off, the dispute clause and the indemnity terms, and to confirm which route still applies and for how long.