How long do representations and warranties survive after a business sale?

A survival period is a deadline written into the purchase agreement. It says how long after closing a buyer can bring a claim that a representation or warranty was untrue. Because the parties write it, the number can differ from one deal to the next. Provincial limitation statutes sit underneath that number, and they also differ by province. Read the clause and the statute for your province together, not one without the other.

What the survival clause does

Read the clause for which statements continue after closing and for how long. A buyer’s lawyer can ask whether title, tax and employee matters get a longer period than the general one. The lawyer can also ask whether the clock runs from closing or from the day the buyer finds the problem. A seller can ask for the same points to be settled in writing, so that neither side is left guessing about the deadline.

The statutory default in three provinces

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 the claim was discovered, and, subject to the Act’s exceptions, no proceeding shall be commenced after the 15th anniversary of the day the act or omission took place. British Columbia’s Limitation Act says that, subject to the Act, a court proceeding must not be commenced more than two years after the day the claim is discovered, and, subject to Parts 4 and 5, not more than 15 years after the day the act or omission took place. Alberta’s Limitations Act, subject to its listed exceptions, gives a defendant who pleads the Act immunity if the claimant does not seek a remedial order within two years after the date the claimant first knew, or in the circumstances ought to have known, the matters the Act lists, or within ten years after the claim arose, whichever expires first. Other provinces and territories have their own statutes.

Can the agreement change the period?

In Ontario, a limitation period applies despite an agreement to vary or exclude it, subject only to listed exceptions. Some of those exceptions apply only to business agreements, meaning agreements made by parties none of whom is a consumer under the Consumer Protection Act, 2002. Alberta’s Act gives effect to an agreement that expressly extends a limitation period, says an agreement that purports to reduce one is not valid, and requires the agreement to be in writing and signed by the person adversely affected. Check how your province’s statute treats a survival clause before assuming the contract deadline is the whole story.

For how survival periods fit with indemnities, see Representations and warranties vs indemnities. For a claim after closing, see Is it too late to claim against the seller months after closing?