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

A business sale in British Columbia can include goods such as inventory and equipment, and two provincial Acts speak to what the law adds to the agreement and what has to be in writing. This page covers British Columbia only. It describes what the Acts say; it does not tell you how to draft your agreement. For the closest term in the glossary, see vendor contracts.

Terms the Sale of Goods Act implies

Under section 16, unless the circumstances show a different intention, a contract of sale implies a condition that the seller has a right to sell, a warranty of quiet possession, and a 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. Section 18 says there is no implied warranty or condition of quality or fitness except those it lists, which include fitness for a purpose the buyer made known in reliance on the seller’s skill or judgment, where the seller’s business supplies goods of that description; merchantable quality for goods bought by description from a seller who deals in them; and durability for a reasonable period.

Changing those terms by agreement

Section 69 says an implied right, duty or liability may be negatived or varied by express agreement, by the course of dealing, or by usage that binds both parties. Section 20 sets a no-waiver rule, but only for a retail sale or lease, and the Act’s definition of that term does not include a sale to a purchaser who intends to use the goods primarily for business purposes, or to a corporation or an industrial or commercial enterprise. Whether section 20 touches your deal is a question for a British Columbia lawyer.

What must be in writing

The Sale of Goods Act says that, subject to it or any other Act, a contract of sale may be made in writing, by word of mouth, partly both, or be implied from the parties’ conduct. Another Act can still require writing. Under section 59 of the Law and Equity Act, subject to the exceptions in that section, a contract respecting land is not enforceable unless one of the circumstances in section 59(3) is present, including a writing signed by the party to be charged or that party’s agent. A guarantee or indemnity is not enforceable unless evidenced by writing signed by the guarantor or indemnitor, or an agent, or unless that person has done an act indicating it was made.

Section 36 gives legal effect to an absolute assignment, in writing signed by the assignor and not by way of charge only, of a debt or other legal chose in action once express written notice is given to the debtor, subject to the equities it names. British Columbia’s Electronic Transactions Act says a legal requirement for a signature is satisfied by an electronic signature, subject to the Act’s exceptions, and the Act does not apply to documents that create or transfer interests in land and require registration to be effective against third parties.