What terms does Alberta law imply into a business sale agreement, and what must be in writing?

A business sale in Alberta can include goods such as inventory and equipment, and the Sale of Goods Act speaks to what the law adds to the agreement and when a contract for goods can be enforced. This page covers Alberta only. It describes what the Acts say; it does not tell you what to sign. For the neighbouring example, see British Columbia’s terms.

Terms the Act implies

Under section 14, unless the circumstances of the contract show a different intention, a contract of sale carries an implied condition that the seller has a right to sell the goods (in an agreement to sell, that the seller will have that right when the property is to pass), an implied warranty of quiet possession, and an implied warranty that the goods are free from any charge or encumbrance in favour of a third party not declared or known to the buyer before or when the contract is made. Subject to the Act and any Act in that behalf, section 16 says there is no implied warranty or condition as to quality or fitness for any particular purpose except as that section provides. The exceptions include fitness for a purpose the buyer made known so as to show reliance on the seller’s skill or judgment, where the goods are of a description the seller supplies in the course of business (but not for a specified article sold under its patent or other trade name), and merchantable quality for goods bought by description from a seller who deals in them. If the buyer has examined the goods, there is no implied condition as regards defects that the examination ought to have revealed.

Changing those terms by agreement

Section 54 says a right, duty or liability that would arise by implication of law may be negatived or varied by express agreement, by the course of dealing between the parties, or by usage if the usage binds both parties. Under section 16(7), an express warranty or condition does not negate an implied one unless it is inconsistent with it.

What must be in writing

Subject to the Act and any Act in that behalf, section 5 lets a contract of sale be made in writing, by word of mouth, partly both, or be implied from the parties’ conduct. Section 6 adds that a contract for goods of a value the Act sets or more is not enforceable by action unless the buyer accepts part of the goods and actually receives that part, or gives something in earnest or in part payment, or unless a note or memorandum in writing is made and signed by the party to be charged or the party’s agent. Alberta’s Electronic Transactions Act says that, subject to subsection 16(2) and section 22, a legal requirement that a record be signed is satisfied by an electronic signature, and section 8(1) says nothing in the Act requires a person to use, provide or accept a record in electronic form without the person’s consent. Section 7(1) lists records the Act does not apply to, including records that create or transfer interests in land and guarantees under the Guarantees Acknowledgment Act, which a separate page covers.

Shares and corporate sellers

The Sale of Goods Act defines goods as including all chattels personal other than things in action or money. A share sale is a different question for your lawyer. Where a corporation sells, leases or exchanges all or substantially all its property other than in the ordinary course of its business, the Business Corporations Act, section 190(1), requires the approval of the shareholders in accordance with subsections (2) to (6).