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

A business sale agreement is a contract, and in Manitoba the statutes below shape part of what the law adds to it and what has to be written down. This page covers Manitoba only; for a neighbouring example of the same question, see what terms British Columbia law implies. The Sale of Goods Act deals with goods, which it defines to include all chattels personal other than things in action and money. That fits items such as inventory and equipment. A share sale is a different question for your lawyer; see what a share purchase agreement is.

Terms the Act implies

Section 14 says that in a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied condition that the seller has a right to sell the goods. There are also implied warranties that the buyer will have quiet possession and that the goods are free from any charge or encumbrance in favour of a third party that was not declared or known to the buyer before or at the time when the contract is made. Section 16 starts from the opposite point: subject to the Act and any statute in that behalf, there is no implied warranty or condition as to quality or fitness, except as listed. The list includes fitness for a particular 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 (with no implied fitness condition 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 to defects the examination ought to have revealed.

What the parties can change

Section 56 allows any right, duty or liability that would arise by implication of law to be negatived or varied by express agreement, by the course of dealing between the parties, or by usage that binds both parties. Section 16(d) adds that an express warranty or condition does not negative a warranty or condition implied by the Act unless inconsistent with it, so ask your lawyer how the agreement’s own warranties and exclusions should be worded.

The Statute of Frauds repeal

Section 5 of the Sale of Goods Act says, subject to that Act and any statute in that behalf, that a contract of sale may be made in writing, by word of mouth, partly in each, or may be implied from the parties’ conduct. Subject to its section 2, Manitoba’s repealing Act repeals the Statute of Frauds and the Statute of Frauds Amendment Act insofar as they are part of the law of the province; section 2 lets them be pleaded in an action based in whole or in part on acts done, contracts or agreements made or other claims that arose before October 1, 1983. That is not a statement that nothing in a deal needs writing. Section 5 is itself subject to any statute in that behalf, so ask a Manitoba lawyer which documents in your deal need writing or registration. For a sale of all or substantially all of a corporation’s property outside the ordinary course of business, the Corporations Act section 183(3) requires shareholder approval under its subsections (4) to (8).