Does a business purchase agreement need to be notarized in Ontario?

A buyer may ask whether a business purchase agreement has to be notarized to be valid in Ontario. The statutes read for this page ask for a writing and a signature in the situations they cover. They do not ask for a notary. A notary can still be used, and individual documents in a deal can carry their own formal rules, so the question is worth putting to the lawyer acting on the deal.

What a notary public does

Ontario’s Notaries Act lists the powers of a notary public. They include the power to witness or certify, and attest, the execution of a document. That is the whole function relevant here: a notary confirms how a document was signed. Nothing in that power makes notarization a condition of a contract being formed. Ask whether any document or outside party in your deal calls for it.

What the Statute of Frauds asks for

Section 4 of the Statute of Frauds covers, among other things, contracts about land and promises to answer for another person’s debt. It provides that no action is brought to charge a person upon a contract or sale of lands, or any interest in or concerning them, unless the agreement, or some memorandum or note of it, is in writing and signed by the party to be charged or a person lawfully authorized by that party. If a business sale includes real property or an interest in it, or someone guarantees another’s debt, that rule is engaged. The test is a signed writing, not a notarized one.

Electronic signatures

The Electronic Commerce Act provides that a legal requirement that a document be signed is satisfied by an electronic signature, subject to requirements that can apply to prescribed documents. The Act does not apply to wills and codicils, trusts created by them, powers of attorney for an individual’s financial affairs or personal care, negotiable instruments, documents of title (with one exception) and documents that are prescribed. Section 3 adds that nothing in it requires a person to use or accept an electronic document without the person’s consent. Ask your lawyer whether any document in the deal falls into one of those categories.

Questions to put to your lawyer

• Does the deal include land, and if so, does the land transfer document have its own formal requirements?
• Is anyone signing through an agent, and is that authority in writing?
• Is there a lender, landlord or licensing body asking for a witnessed or notarized signature?
• Can the agreement be signed electronically, or does any schedule need wet ink?

For what the agreement itself should say, see what should be in a business purchase agreement.