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Purchase and Sale of Business Disputes

In Canada there are generally two ways in which one may purchase or sell a business – an asset deal or a share deal. An asset deal involves the sale of all or part of the company’s property interests. On the other hand, a share deal involves the sale of shares in the actual company. So the difference lies in whether the purchaser is acquiring the property of the company directly or is this accomplished indirectly via ownership of the actual company or some stake thereof.

Any disputes that arise during the purchase or sale of a business could be addressed in a number of ways. The initial concern should be to see any dispute resolution provisions in any agreements that may have been entered into by both parties for the purpose of the sale of the business in question. If no such agreements or provisions exist, there are options available beyond the court system.

Specifically, there are three such options of Alternative Dispute Resolution: arbitration, mediation, and negotiation. Negotiation should be the first step resorted to, as the parties and their lawyers can informally guide it. The next step should be mediation, where the parties will voluntarily consult a mediator who will work with both sides with a view to bringing a resolution. Then, if mediation does not resolve the dispute, perhaps arbitration is the correct path. Arbitration involves seeking the services of an arbitrator agreed to in common. The process is more formal and would involve the arbitrator rendering a decision, which may be either binding or non-binding depending on the nature of the arbitration. Of course, the above alternatives are subject to the wronged party’s right to commence a proceeding in court.