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Court of Appeal Finds Put-Right Option as Forming Part of Consideration

Zeilikman Law

Zeilikman Law

Case Summary

This dispute involved an Asset Purchase Agreement (“APA”), wherein the defendants purchased from the plaintiffs a judgment they had obtained against a third party. A corporation owned by the defendants bought the judgment for two promissory notes and $200,000. The APA contained a “Put-Right option,” which allowed the plaintiffs to compel the defendants to purchase the shares for $3.00 a share, if notice was given within one-year following January 22, 2013. Subject to proper notice, the defendants would then have 10 business days to finalize the purchase of these shares. If the defendants failed to purchase the shares in accordance with the agreement, the plaintiffs were entitled to exercise any remedies available to them including filing a lawsuit.

On February 25, 2013, the plaintiffs gave notice to the defendants that they wished to exercise the Put-Right option. The defendants incorrectly responded that this notice was premature. On December 9, 2013, the plaintiffs sent another letter in which they demanded payment for the shares by no later than January 2, 2014. The defendants failed to pay and the plaintiffs sued and brought a motion for summary judgment.

The motion judge ruled in favour of the plaintiffs on summary judgment and the defendants appealed. The appeal was dismissed. The standard of review in this case was reasonableness, meaning that absent a palpable and overriding error by the motion judge, the Court of Appeal did not have jurisdiction to overrule the motion judge’s ruling. During the motion the defendants argued the Put-Right option contained in the APA was a unilateral contract, which required strict compliance on behalf of the plaintiffs if they were to enforce the Put-Right option. The defendants argued that the plaintiffs cannot now seek to enforce the Put-Right option because they failed to provide section 116 Certificates for the shares they were seeking to sell. The motion judge found the plaintiffs substantially complied with the terms of the Put-Right option by offering proper notice within the prescribed time frame, and any failure on their behalf of to provide section 116 Certificates did not  vitiate the option clause altogether.

The Court of Appeal found the Put-Right option to be a bilateral contract, as it formed an integral part of the overall agreement for the purchase of the judgment. The Put-Right option operated as security for the plaintiffs for $400,000, which was part of the purchase price due to the plaintiffs. As such, substantial compliance was all that was necessary on the part of the plaintiffs in order to rely on the Put-Right option.

OUR THOUGHTS

The issues and facts involved in this case are highly idiosyncratic, which renders this decision of little guidance for future cases. However, the Court of Appeal’s finding the Put-Right option as a bilateral contract was pivotal in the plaintiffs’ success in this proceeding. Commercial contracts can be very complicated at times, sometimes entail a “mini-contract” that forms part of the overall agreement, or agreements within an agreement. How these “mini-contracts” are interpreted by the courts in relation to the overall agreement will impact the parties’ respective exposure to liability. Depending on a party’s particular interests in an agreement, it may be prudent to draft certain option clauses in a way that characterises them as forming part of the consideration for the purchase or sale of assets or interests.

See: Flintoff v Crown William Mining Corporation 2016 ONCA 86

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.

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Legal Receptionist

Zeilikman Law is an employment law firm located in Vaughan, Ontario. We are looking to hire a legal receptionist to join our firm. Preference will be given to candidates who have experience working as a receptionist at another law firm.

Location: Vaughan, Ontario.

Start Date: Immediately.

Hours: Monday to Friday, 9 am to 5 pm. Full time. In-person only. This is not a remote work position.

Wages: 35,000 to 40,000 per year.

Duties and Responsibilities:

  • Manage our firm’s multi-line telephone system to receive incoming calls.  Screen incoming telephone call inquiries to determine the nature of the telephone call and provide standard information related to our legal services.  Take and deliver messages and route incoming telephone calls to the appropriate staff person.
  • Answer general inquiries coming from the firm’s social media and website email.
  • Welcome in-person visitors upon arrival.  Direct visitors to the appropriate staff person and / or office or boardroom.
  • Organize in-person visitor schedule to prevent overlap and multiple bookings.
  • Receive, sort, and distribute daily mail and deliveries.
  • Arrange for couriers.
  • Keep front reception, kitchenette area and boardroom tidy.
  • Perform various clerical duties such as filing, photocopying, and faxing on an as-needed basis.
  • Process client or other payments.
  • May be asked to run minor errands outside of office such as attending post office to arrange a courier or pick up mail.
  • May be asked to assist other law clerks or lawyers of the firm as required and as appropriate.
  • Any other basic administrative duties or tasks as deemed appropriate.

Required Skills:

  • Basic knowledge of general office procedures including filing, faxing, and printing and copying.
  • Basic word processing computer skills.
  • Proficient in receptionist and telephone practices, etiquette, and decorum.
  • Professional attitude and appearance.
  • Excellent organizational skills.
  • Positive customer service attitude is a must.
  • Must be able to maintain confidential and sensitive information.

Education and Experience:

  • Highschool diploma or equivalent.
  • 1 – 2 years’ experience in an office setting with an emphasis in accounting, reception or clerical work is required.   We would prefer experience in a law firm environment.

Applications for this position should be sent via email to jennifer@zeilikmanlaw.com. All applications should include a cover letter, resume and at least two references. Only successful candidates will be contacted.