Can I sue the seller personally if their corporation sold me the business?

Start with who signed. If a corporation sold you the business, the purchase agreement is a contract between you and that corporation. The Canada Business Corporations Act (CBCA) says a corporation has the capacity and, subject to that Act, the rights, powers and privileges of a natural person. A provincially incorporated seller falls under its own province’s corporate statute, so confirm which statute governs before relying on anything below.

What the CBCA says about shareholders

Under CBCA section 45(1), the shareholders of a corporation are not, as shareholders, liable for any liability, act or default of the corporation, except under the subsections the section lists. One of those is section 226(4), covered below. The rule is about liability as a shareholder. It does not address what an owner personally agreed to in their own name.

Where the owner may be a party

Check who is named as a party to the agreement. If the owner signed a personal guarantee, a personal covenant or a non-competition promise, ask a lawyer whether that signature gives you a claim against the owner personally. Whether a statement made outside the written agreement can support a claim is a question for a lawyer, because the answer depends on the facts and the agreement’s wording.

If the selling corporation is dissolved

Corporations Canada’s guide on dissolving a business corporation says a corporation with property or liabilities can be dissolved only when its property has been distributed and its liabilities have been discharged. CBCA section 226(2) allows a civil, criminal or administrative action or proceeding to be brought against the dissolved body corporate within two years after its dissolution as if it had not been dissolved. Under section 226(4), a shareholder to whom any of its property was distributed is liable to a person claiming under section 226(2) to the extent of the amount received, and an action to enforce that liability may be brought within two years after the date of dissolution. Separate limitation statutes also apply. Ontario’s Limitations Act, 2002 says that, unless the Act provides otherwise, a proceeding shall not be commenced after the second anniversary of the day a claim was discovered.

Before closing, ask whether the owner will give a personal guarantee, whether part of the price will be held back, and whether the corporation will stay in existence while claims can still arise. See also How long am I liable after selling my business?