Can I sue a buyer who tells a competitor my business is for sale?

You may have a claim, but it turns on what the buyer agreed to and what was actually disclosed. The first document to pull is the confidentiality agreement, often called an NDA, that the buyer signed before seeing your information. This page covers what to check, not what a court will decide in your case. If you have not yet set up a confidential process, how to keep a sale confidential covers the steps before any buyer sees detail.

Start with the agreement

Read what it covers. Does it stop the buyer from telling anyone the business is for sale, or only from sharing the documents you handed over? Does it name who the buyer may share with, such as lenders and advisers, and say what follows a breach? The Canadian Intellectual Property Office lists non-disclosure or confidentiality agreements among the ways to keep valuable business information secret. It also warns that once a trade secret is made public it loses its business value and legal remedies become complex, so ask a lawyer promptly whether what was disclosed is protected.

If personal information was shared

Suppose the buyer received personal information about your employees or customers. Under PIPEDA s.7.2(1), organizations that are parties to a prospective business transaction may use and disclose personal information without the individual’s knowledge or consent if, among other conditions, they have an agreement requiring the recipient to use and disclose it solely for purposes related to the transaction, to protect it with appropriate safeguards, and, if the deal does not proceed, to return or destroy it within a reasonable time. That is in addition to the circumstances in s.7(2) and (3). Section 7.2(3) says an organization shall comply with the terms of any agreement it enters under paragraph (1)(a), so check whether passing that data to a competitor breaks those terms.

Gather facts before anyone writes a letter

Write down what the buyer is said to have told the competitor, when, and how you learned of it. Ask whether the competitor could have learned of the sale elsewhere. BDC notes that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. A leak does not always trace to the buyer. Keep a record of what each buyer was given and when, and who signed what.

Then take the agreement and your notes to a lawyer. Ask which remedies the agreement and your province allow, whether a demand that the buyer stop is worth sending, and whether the rest of the sale process should change in the meantime. If a competitor is a possible purchaser anyway, see selling to a competitor.