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

A business sale agreement in Newfoundland and Labrador sits on top of provincial statutes that imply terms and set writing rules. This page covers Newfoundland and Labrador only; for a neighbouring example, see what terms British Columbia law implies. The Sale of Goods Act defines goods to include personal property other than things in action and money, so it deals with items such as inventory and equipment. A share sale is a different question for your lawyer; see what a share purchase agreement is.

The value-based enforceability rule

The Act says a contract of sale may be made in writing, by word of mouth, partly in each, or by conduct, and that section does not affect the law relating to corporations. It then sets a value, which this page does not repeat. A contract for the sale of goods of that value or more is not enforceable by action unless the buyer accepts part of the goods and actually receives them, the buyer gives something in earnest to bind the contract or in part payment, or some written note or memorandum of the contract is made and signed by the party to be charged or that party’s agent. For land, guarantees and other formalities, ask a lawyer licensed in Newfoundland and Labrador.

Implied terms and how to vary them

In a contract of sale, unless the circumstances show a different intention, the Act implies a condition that the seller has a right to sell the goods, a warranty of quiet possession and a warranty that the goods are free from undeclared charges or encumbrances. It then says there is no implied warranty or condition as to quality or fitness except as listed. Merchantable quality applies to goods bought by description from a seller who deals in them, but where the buyer has examined the goods, there is no implied condition as to defects that examination ought to have revealed. A right, duty or liability implied by law may be negatived or varied by express agreement, the course of dealing, or usage that binds both parties.

Signatures and shareholder approval

The Electronic Commerce Act says a requirement under a law for the signature of a person is satisfied by an electronic signature. Where the signature is on a type of information designated in the regulations, that rule is met only when, in view of the relevant circumstances including a relevant agreement and the time of signing, the signature is reliable for identifying the person and its association with the information is reliable. Where the signed document is to be provided to a public body, further conditions apply. The Act lists exclusions, including a negotiable instrument, except as provided in Part III, and a type of document designated by regulation, and it does not limit a law that expressly authorizes, prohibits or regulates the use of electronic information. Under section 303 of the Corporations Act, a sale, lease or exchange of all or substantially all of a corporation’s property outside the ordinary course of business requires shareholder approval in accordance with that section. For lease consent, see the Newfoundland and Labrador lease assignment guide.