What can I do if a buyer breaches confidentiality after a failed business sale?

A sale that fails can leave a buyer holding your financials, customer and supplier lists and other sensitive records. BDC says a confidentiality agreement is meant to protect information belonging to both parties, and that a letter of intent is very often preceded by one. Whether you have a remedy turns on what that agreement says and what the buyer did. This page covers the first steps, not a legal opinion on your case.

Read what you signed

BDC describes a confidentiality agreement as a document where a party undertakes not to use, disclose or permit the disclosure of confidential information, except to evaluate its participation in the proposed transaction. It also notes that a letter of intent is not meant to be fully binding unless expressly stated, but can bind a party on confidentiality and exclusivity if it says so. Check which document applies, who signed it, how long the duty lasts and what remedies it names.

Gather the facts

Write down what was shared, when and with whom, and what you now know about its use. Keep copies of the agreement, the data room access records and any messages. Ask whether the information was used or passed on, or whether the buyer is acting on it. If the information includes personal data about employees or customers, ask your lawyer whether privacy law also applies.

Watch the limitation period

Ontario’s Limitations Act, 2002 says that, unless the Act provides otherwise, a proceeding cannot be started after the second anniversary of the day the claim was discovered. Alberta’s Limitations Act says that, subject to its exceptions, if a claimant does not seek a remedial order within 2 years after first knowing, or when it ought in the circumstances to have known, of the injury and the other matters in s.3(1)(a), or within 10 years after the claim arose, whichever expires first, a defendant who pleads the Act is entitled to immunity. Other provinces have their own regimes, and both Acts let some agreements change the period within limits, so ask a lawyer to confirm the deadline.

A lawyer can then advise whether to send a demand letter, seek a court order or negotiate. See how to keep a sale confidential for protections to set up before the next buyer.