Dynamic Lawyers Blog

Blackberry Torch…I’d love to review one…

admin — Fri, 03 Sep 2010 07:19:08 +0000

Marc Saltzman from Newtalk 1010 and sync-blog.com did a great review of RIM’s new Blackberry Torch in this blog. This new Blackberry has both a 3.2-inch touchscreen and a slide out QWERTY keyboard. Super cool (although it’s not considered to be an i-phone killer). I was wondering, and hoping, that someone would give me one of these cool new devices to test out and write a review on. People are always giving Marc cool new stuff to review, so why not me? I’ve owned a Bold 9000 since it first came out. In fact, I had to fight off a school chum for mine. Anywho, going back to the Torch, I read in Marc’s review that, while it has a new and improved camera, more memory (8GB), the real story is in the operating system and web-browsing capabilities. It’s smarter than ever, with cool and practical shortcuts. Here’s a youtube video that reviews the various functions of the Torch:

It seems like it will go for $199 with a 3 year plan or $1,000 (at future shop) as a stand alone.

Law Firm SEO | Search Engine Optimization (Part 2): 5 Tips on Improving Your Search Engine Rankings (647-680-9530)

admin — Fri, 03 Sep 2010 03:29:37 +0000

So I never realized that talking about my experiences with paid vs. organic search would be such a hit. Since there seems to be a lot of demand for this kind of stuff, I thought I’d talk about 5 tips and tricks that I use (among many, many others) to help people find my website. FYI, if you’re a lawyer or law firm and you’re looking for some consulting advice, drop me a line. So without further adieu, here are my 5 tips to help your website rank higher in search engines:

1. Write regularly
When I first got a quote from an SEO company (a few years back) about helping me to reach page 1 on Google for my keywords, I was told that I would need to product 15 new articles every month. 5 new blogs posts. 5 pdf documents. And 5 word documents. Today, looking back, I realize that if I had hired that company, I wouldn’t be anywhere near where I am today in search engine rankings. Why? Because you need to empty your brain on your blog as frequently as possible. Why? Because if you don’t do it, someone else will. Try aiming for 5 new posts, articles, etc. every WEEK. That may sound like a lot, but you’ll soon get used to writing quickly about topics that interest you. Your writing skills and your writing VOICE will improve.

2. Write Well
Writing a lot isn’t the solution if you’re not writing unique and interesting stuff. Near the beginning of my SEO days, I hired an article writing company. I paid them about $9 per 500 word article. I just wanted to try them out. They could save me a lot of money in the long run if I wasn’t sitting in front of my computer writing all this stuff. I told them to give me a blog about Canadian criminal law. I told them the topics I wanted covered and some examples from various websites. What I got back – 2 days later – was a piece of crap. It’s like they paraphrased what was already written on the web. The writing style was that of a 17 year old. I couldn’t possibly use it. And that was the end of that experiment. Another SEO company gave me a quote and wanted to write legal-related stuff for $100 per article. I figured that they would outsource it and pay $9 and keep $91 for themselves. What would I get in return? Likely: crap. Why? Because no one can write about legal stuff unless they know it. You can’t pretend. You either know it or you don’t. You either have the skills and knowledge and know-how or you don’t. You either went to university and became a lawyer and articled or you didn’t. Don’t try to pretend to be a lawyer: you can’t find yourself in hot water when things go wrong. So, at the end of the day, the only good quality content which I put on the web comes from me, an Ontario lawyer who thinks he knows what he’s talking about.

3. Write With Your Audience In Mind
Look, you can’t just write whatever you want. You need a purpose. A strategy, if you will. Your purpose may be: I need to get prospective clients to find me on the internet. Or your purpose may be: I need to show my existing clients that I have a web presence. Or your purpose may be: I need to do something fun and show the world a little bit more about me by talking about humerous or interesting things in the news. Whatever your purpose is, just be clear about it from the get go. Trying to do too much with your writing can confuse the end-user. Make it simple, and constantly hammer the same message.

4. Organize What You Write
Yes, you need to write for your audience, but you also need to write with search engines in mind. Search engines like Google, Yahoo, Ask, Bing, etc. look for certain things to help them decide how to rank your content. Is your content original? Is it regularly updated? Are you targeting certain keywords in your text? Are the keywords in your URL and headings? Are your image files named with your keywords? Are you using a low keyword density? You need to think about these things, but don’t overdo it! Search engines know when you’re trying to trick them and will punish you (by sending your website to the sandbox – i.e. making it hidden – for months at a time). If you think about your audience and understand a bit about SEO, then you’ll be fine. Just don’t try to trick anyone or your website will suffer.

5. Write Interesting Stuff
If you’re passionate about what you write, then it will show. If you’re just talking about boring legalese which only other lawyers and judges will read, what’s the point (unless that’s your target audience)? If you love what you’re talking about and have strong views about it, then it will show. People love to read examples. They want to see a little bit of theory and a lot of application. So entertain them, if you can. I realize that the law can be a bit (or very) dry sometimes, so try to jazz it up. A lot of lawyers are afraid about what to write, so I generally ask them: what interests you? You can only write about “Toronto personal injury lawyers” so many times before no one cares. But if you talk about crazy cases you were involved in or read about, then that’s a good start. If you talk about solutions to people’s problems, then that’s good too. If you talk about your personal experiences, it shows your audience that you’re human too. So what are you waiting for? Try it out!

These 5 tips will help increase your traffic: you’ll develop better writing skills, more interest in your writing from your target audience, and higher rankings from search engines and other websites that want to link back to your website. Best of luck and if you need any help, give me a shout!

Limited Partnerships (Part 18): Forming the Ontario LP using an extra-provincial entity

admin — Thu, 02 Sep 2010 19:14:04 +0000

Ontario Limited Partnership Formation

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to drafting, reviewing, interpreting or resolving disputes concerning partnership and limited partnership agreements, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers registered on the website who can answer your questions or help you with your partnership and limited partnership agreements. I should know – I’m one of them and you can contact me directly.

The New Delaware LLC (or Alternative for Investing)?
I honestly believe that Ontario Limited Partnerships will become the next type of Delaware Limited Liability Company. Why? Because those companies are being subject to more stringent tax reporting requirements. Ontario Limited Partnerships are similar to Delaware LLCs in many respects. First, the limited partners are liable for the partnership’s debts only up to their contribution or amount promised (akin to a corporation). Second, the limited partnership is a flow through entity, so no taxes are paid at the limited partnership level (akin to a partnership). Ontario Limited Partnerships have the best of both words – corporation and partnership. So long as you’re mindful of partnership laws, tax laws, securities laws and the like, you’ll be flying straight with your Limited Partnership.

Forming the Limited Partnership using an extra-provincial corporation
OK, so you are not located in Ontario or even Canada, but you want to have an Ontario Limited Partnership to do business through. That’s perfectly OK for the purposes of Ontario law. Now, remember: an Ontario LP is comprised of at least one general partner (typically a corporation, because the general partner is exposed to unlimited liability) and at least one limited partner (e.g. an individual, corporation, partnership, etc.).

So you have an extra-provincial corporation. What next? Well, if you want it to be the Ontario general partner, you need to obtain an extra-provincial license for the corporate partner. There is a fee ($330) that has to be paid, paperwork that has to be filed, and an agent for service appointed in order to receive service on behalf of the extra provincial corporation. I’ve previously blogged about this process here. You can contact me directly if you need help doing this. Once you’ve got your extra-provincial license, you can now proceed to register the limited partnership using the extra-provincial corporation as a general partner. THIS IS PERFECTLY OK. This would not, however, be considered an extra-provincial limited partnership. An extra-provincial limited partnership is a partnership that is already registered and organized in some other jurisdiction.

What about an extra-provincial LLC as the general partner?
I have spoken with government staff on a number of occasions and they have confirmed that an extra-provincial Limited Liability Company (i.e. not formed in Ontario or even Canada) CAN be the GENERAL PARTNER of an Ontario limited partnership. So what’s an LLC? A typical LLC is a hybrid entity: part partnership, part corporation. It takes the best and worse of both worlds. As a partnership, it can be disregarded for tax purposes. This means it’s a flow through entity (just like an Ontario limited partnership). So the members (not shareholders) who own the units of the LLC receive the profits and losses and are taxed accordingly. This differs from a corporation, where the corporation is a separate legal entity (it gets taxed) and then the shareholders receive dividends (they get taxed again!). So, as a partnership-like structure, it has tax advantages. But it also conveys limited liability status on its members and managers. SWEET!

So how does an LLC become the general partner of an Ontario limited partnership? Well, we look at the definition of a general partner under the Limited Partnerships Act. Section 2(2) of the Act says that “a limited partnership shall consist of one or more persons who are general partners…”. OK, so a “person” can be a general partner. So who’s a person, then? Turning to section 1(1) of the Act, we see that “person” includes an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, and a natural person in his or her capacity as trustee, executor, administrator or other legal representative. Hmmm…so does an LLC count as a “person”? It has traits for both a partnership and a corporation. It is also not incorporated. I think it would fit within the definition of an “unincorporated organization” under section 1(1). So I would argue that an extra-provincial LLC is capable of being the general partner for an Ontario Limited Partnership.

Before you can register your Ontario Limited Partnership, you’ll need to register the extra-provincial LLC: you fill out Form 6 and pay $80 to register the business name under the Business Names Act. The registration lasts for 5 years, so be sure to renew it! Also, if your name is inappropriate (e.g. includes certain words that identify it as being government) or confusing similar to a competitor’s name in the industry (particularly one that has a trademark), then you may run into problems trying to register or keep the name. You might want to do a NUANS name search before submitting the registration to avoid wasting extra time and money if the name is inappropriate or confusingly similar to an already existing name.

Ontario Limited Partnerships (Part 17): Foreign Persons creating an Ontario LP

admin — Wed, 01 Sep 2010 18:03:25 +0000

I thought I would blog about certain nuances when it comes to limited partnerships formed by extra-provincial persons. These are often referred to as extra-provincial limited partnerships, but I don’t think this is always the case (as discussed below). But before we get into this discussion, lets start off with the basics, shall we?

What is an Extra-Provincial Limited Partnership?
An Extra-Provincial Limited Partnership is a few things. First, it is a general partnership that is already is in existence. A general partnership is the relationship that exists between two or more parties doing business in common with a view to making profit. So, just to recap, if two individuals living in Mexico or the U.S. wanted to form an Ontario limited partnership, they would first have to have a general partnership between themselves. Remember: an Ontario limited partnership is simply a designation granted by the Ontario statute. Now, after being organized as a general partnership, it becomes a limited partnership – just not in Ontario. A general partnership in Ontario becomes a limited partnership by filing and being issued a Form 3 Declaration from the Ontario government. So the idea is that Ontario is willing to recognize limited partnerships from other jurisdictions. That recognition is done when the Limited Partnership files a Declaration Form 3.

Now it’s important to note that I’ve generally come across two situations that involve limited partnerships formed by foreign entities: (1) a limited partnership organized outside of Ontario wishes to do business in Ontario and (2) extra-provincial persons wish to create and use an Ontario limited partnership as a legal structure but do not wish to do business in Ontario. For the purposes of this blog, I’ll be discussing the second scenario.

What’s so special about the second scenario? Well, it’s interesting because it is not the case that a limited partnership is formed outside of Ontario and which simply needs to register as an extra-provincial limited partnership. The reality is that the limited partnership is being formed in ONTARIO under the Limited Partnerships Act, but it is done so by persons who are not resident or doing business in Ontario. This can get a big confusing: it’s not an extra-provincial limited partnership, it’s just a plain old regular Ontario limited partnership. The only difference is who is forming it. So, just to recap, I’m going to be talking about how foreign persons (i.e. an extra-provincial corporation, such as a U.S. or Mexican company) can form an Ontario limited partnership.

Extra-Provincial License for the Corporation
OK, so here’s the situation. A corporation is set up to be the general partner. Lets assume, for simplicity’s sake, that this corporation is not an Ontario or even Canadian corporation (if it is, then there would need to be compliance with Ontario or Canadian corporate, tax, and securities laws with respect to that corporation). For their part, limited partners are ready to partner up with the general partner. How does it all fit together such that they form an “Ontario Limited Partnership”?

Well, the Ontario government will only allow an extra-provincial corporation to be a general partner if it has obtained a license under the Extra-Provincial Corporations Act. Even if it’s not doing business in Ontario, the government here wants to know who this extra-provincial corporation is. So they’ll want to see (among other things) information about the corporate name, head office, jurisdiction which it is created and subject to, its proposed business in Ontario, etc. They will also need to see how is the Agent for Service in Ontario. The idea is that someone over 18 years old who is resident in Ontario or a corporation with a head office in Ontario must act as the Agent for Service of the extra-provincial corporation for the purpose of receiving service of process, notices, or other proceedings (so that service on the Agent is deemed to be service on the extra provincial corporation). In certain situations, the Ontario government will also want an ORIGINAL Certificate of Status issued under the seal of the incorporating jurisdiction, signed by the proper person, and showing:

The name of the corporation;
The date of incorporation;
The jurisdiction to which the corporation is subject; and
That the corporation is valid and existing.

Some jurisdictions (e.g. Netherlands) do not provide these kinds of certificates, but the Ontario government still allow corporations from these jurisdictions to be registered. Finally, the Ontario government will want to see an original NUANS name search report to make sure that there is no conflicting or confusingly similar name of the corporation which is currently in existence. It generally takes about 3 weeks for the paperwork to be processed once the Ontario government has received it. There are also government fees (i.e. $330) which must be paid to obtain this extra-provincial corporate license.

Registering the Limited Partnership
Now that you’ve got your extra-provincial corporate license in hand for the general partner, it’s time to register the Limited Partnership. Now, as I said above, in the situation I’m describing, the limited partnership has not been formed elsewhere; there is no other organizing statute; so there is no extra-provincial limited partnership. All that’s happening is the formation of a plain and simply limited partnership in Ontario by a general partner who is not a resident in Ontario (it’s a corporation formed outside of Ontario but with a license to conduct business here). And, to simplify matters, I’m also assuming that the limited partnership is not doing business in Ontario. So you fill out the Declaration Form 3 and pay the $220 government filing fee. Once registered, you will need to file a renewal every 5 years. Note: the Ontario government will not send notices out, so you better just keep your eye on the date when the limited partnership must be renewed!

Now, I’ve personally gotten into some debates with government staff as to how to go about filling out this declaration for the situation I’ve described. I’ve spoken with managers in the government office because they seem to believe that the form should be filled out in a certain way. I would strongly urge you to contact me to deal directly with government staff to prevent delays with respect to registering the LP. They may not understand the intricacies of the Limited Partnerships Act and may simply demand documentation which is not needed. It’s quite easy to make mistakes, given that the laws concerning limited partnerships are not always clear.

Carrying on the business of the partnership
Now that the limited partnership has been established, business can be conducted. As I’ve previously blogged about, in Ontario, the limited partnership is not a legal entity capable of holding or dealing with limited partnership property. Rather, it is the general partnership, which has been entrusted with managing the affairs of the limited partnership, which does so on its behalf.

Taxes!
So finally, we come to the issue of taxes. In Canada, a Ontario limited partnership is not a separate legal entity (unlike a corporation) or a”person”. I have previously blogged about this here. As such, they are not considered to be taxpayers (i.e. who are, indeed, “persons”) under the Canada Income Tax Act. Rather, partnership income, losses, assets, and liabilities are all attributable to the partners as per the limited partnership agreement. As per the Canada Income Tax Act, partnerships do not file separate tax returns. They file annual “information returns” setting out their income and details of the partners who are entitled to that income. It is the partners who are required to pay income tax. The limited partnership is simply a flow-through entity.

So to recap: the net income of the partners (for income tax purposes) of a limited partnership is determined by figuring out the net income of the limited partnership. To figure out the net income of the limited partnership, the Act says that you look at it as if it were a separate legal person: s. 96(1)(a). So you include income and deduct allowable expenses and other credits. Then, the limited partnership’s income will be attributed to the partners (usually as per the limited partnership agreement). Each partner must report their income or losses from the partnership and pay taxes accordingly: s. 96(1)(f).

Now, if the partners (e.g. extra provincial general partner and the limited partners) of the limited partnership are resident of some country other than Canada, the issue comes up as to whether any tax is owing in Canada. Generally, under the Income Tax Act, RESIDENTS of Canada at any time in the year are required to pay tax on their worldwide income: section 2(1). Now, if an individual is a non-resident, then they may still have to pay Canadian income tax if they received certain kinds of income from Canadian sources – such as employment income, business income, or income derived from the sale of taxable Canadian property. Now this stuff is somewhat complicated and long-winded, so I think I’ll dedicate another blog to the topic of taxation of partners of a limited partnership if they are resident or non-resident in Canada.

Ontario LP Agreement (Part 16): Terms and Conditions of the Limited Partnership Agreement (Continued)…

admin — Tue, 31 Aug 2010 21:14:36 +0000

Ontario Limited Partnership Agreement Lawyer: Terms and Conditions

Please keep in mind that this is not legal advice. The information provided herein is for educational purposes only. If you would like to get in touch with a lawyer to help you draft, interpret, negotiate or resolve a dispute about an Ontario limited partnership agreement, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers). We have Ontario lawyers who can assist you in this regard (I would know, I’m one of them!). If you want to get in touch with me directly, feel free to email me directly to discuss all your limited partnership agreement needs! If you’d like to buy a text link on this blog post, you can contact me directly.

This is the third of a series of blog posts I’m writing about the terms typically found in a limited partnership agreement. In my first blog, I talked about the Introductory Clause, the Definitions and Interpretation, and the Name of the Limited Partnership. In my second blog, I discussed the Term, Place and Description of Business, and Status of the General Partner. In this blog, I’ll be discussing the Status of a Limited Partner, Capital Contributions, and Division of Net Profits. Again, if you need help in this regard, give me a shout!

Status of Limited Partner
Now, I’ve blogged extensively about what it means to be a limited partner. Essentially, you are a passive investor. You have certain rights under the Limited Partnerships Act and your liability is generally limited to your contribution to the partnership. There are exceptions to having limited liability. These exceptions include having your surname (if you’re an individual) or a distinctive part of your corporate name (if you’re a corporation) form part of the name of the Limited Partnership (see section 6(1) of the Limited Partnerships Act). If this is the case, then the limited partner could be as liable as a general partner (i.e. unlimited liability for the limited partnership’s debts and obligations!). Another exception is when the limited partner take part in controlling the business of the corporation (see section 13(1) of the Act). When this happens, the limited liability protection is also lost. So, although these things are covered in the Limited Partnerships Act, it may be worthwhile to repeat them in the agreement itself.

Capital Contributions
If you don’t have an agreement, all of the limited partners will have to contribute equal amounts of capital to the limited partnership. This is just the function of all partners being equal under the Partnerships Act. This can be modified, however, through a limited partnership agreement. In this regard, you’ll want to specify the amount or percentage and date of initial capital contributions which each limited partner will be making. “Capital” means the sums contributed by the partners for the purpose of commencing or carrying on the partnership business and is intended to be risked by the partners in that business. When a partner contributes capital to a partnership, that capital becomes the property of the partnership. The individual partner loses their property interest in the asset they contributed as capital (be it money or property – but NOT services) and gains an ownership interest in the property of the partnership as a whole. That’s why section 7(2) of the Limited Partnerships Act says that a limited partner’s in the limited partnership is PERSONAL property (even if they contributed REAL property such as land or buildings).

An important question which may come up is whether capital contributions will be required – for example at some date or event in the future or on a regular basis. In order for a limited partnership to be exempt from registering or issuing a prospectus under Ontario securities laws, it must impose regular capital contributions on its membership for financing purposes (this is one of many requirements to qualify as a private investment club).

One way or another, the capital contribution of the limited partners should be documented in a schedule that includes the following information:

Date
Name of individual or corporation
Address of individual or corporation
Capital Contribution in Canadian dollars
Percentage Interest received

In exchange for contributing capital and signing the limited partnership agreement, each limited partner should also sign a Subscription Agreement which explains more of the rights and responsibilities of the limited partner, as well as outlining any securities exemptions which the limited partnership is seeking to rely upon.

Division of Net Profits
Under Section 11(1) of the Limited Partnerships Act, a limited partner has the right (subject to the Act) to a share of profits and to have their contribution returned. If there is no agreement, each limited partner will be entitled to profit in proportion to their actual contributions. Worth mentioning however, is that, under section 11(2) of the Act profits may not be paid out as income to limited partners if doing so would reduce the limited partnership’s assets to the extent that it would be insufficient to discharge its liabilities to third parties (i.e. parties who are not general or limited partners).

In another blog, I’ll continue my discussion of the terms found in a typical limited partnership agreement.

Law Firm SEO | Search Engine Optimization – Why Organic Growth is Key and Why Paid Search Sucks…

admin — Tue, 31 Aug 2010 19:22:09 +0000

Search Engine Marketing | SEO | Optimization – 647-680-9530

Having done my own SEO for the past little while and having tried so many different techniques, I can honestly say that organic growth is the best way to get traffic, while paid search has a lot of problems. Here are my thoughts…

Yes, I’ve written 2 FREE eBooks about law firm search engine optimization (which you can find here) which detail a lot of different techniques I employ or have used in the past. One thing I wasn’t really doing was paying for searches on Google, Yahoo!, Bing, etc. I figured that paying for those things was kind of like renting an apartment: sunk costs month after month without seeing tangible results. If you need traffic to be on your website to encourage people to buy your legal services, then paid ads should send tons of people your way (assuming the ads are set up correctly). What I found, after experimenting for a few months and spending a lot of money, was that my organic results fared better and were much cheaper. When you’re paying $5 or $10 per click on your add, it can ADD up quickly. But I was finding that I was getting TONS and TONS of impressions, but not many click-throughs. I tried to change up my ads. I included pricing to entice my customers. But nothing seemed to change the fact: I was wasting my time and money on paid advertising.

So that’s why I came back (quite quickly) to building my organic search results. I want to build an asset, not waste money every month renting an apartment. Granted, I’m sure there’s a place in every marketing strategy for paid advertising – particularly when you don’t rank high on those keywords that you must absolutely have. But in the long run, I prefer a niche strategy (a la Michael Porter). Pick those keywords that are in high demand but which you can target relatively easily. Focus, focus, focus. Simplify as much as humanely possible. Once you’ve dominated “one beach” (a la Geoffrey Moore), move on to the next one!

So what are the key aspects of law firm SEO? Well, it’s the same with other industries: you need content and links. But you need them to be high quality. You should also avoid quick-fixes by hiring people or using software that employ black-hat or unethical practices. Search engines like Google are constantly finding and punishing websites who use these techniques. One technique, for example, involves using automated software that spiders or crawls blogs looking for high ranking blog posts where you can leave meaningless comments (like “Great Blog!”) and the ability to create links back to your own website. Today, most serious bloggers wouldn’t allow such comments to appear without first moderating them. Or they have installed plugins like Akismet or Spam Karma to kill them on site. Finally, building links too quickly could land you in Google’s SANDBOX. So beware of drinking the Kool Aid that some people try to sell you!

Finally, you need to think of the end-user or consumer of legal services: are they more likely to contact you if you have a one-sided and meaningless ad located on a website? Or are they hungry for meaningful knowledge and want to ask a few questions (perhaps in a forum or on Dynamic Lawyers) before engaging your services? Me thinks that prospective clients are smart and want to read as much about you and their legal issue before making a decision to contact someone. That’s why you need to be ‘up there’ on Google, Yahoo and Bing with respect to the keywords that they will be entering. Make it fresh and interesting and you’ll get your rankings in a short period of time. You also need to be patient. Search Engines don’t trust new websites and won’t rank them as high as older ones. So be patient.

Remember: if you’re a lawyer or law firm and want to grow your online presence organically, give me a shout at 647-680-9530 (I always strive to be on the cutting edge of law firm SEO and can help you achieve your goals). I share a lot of information FREELY, but I’ve still got a lot hidden up my sleeve!

Failing to Use Corporate Name on Contracts, Invoices, Orders for Goods and Services, etc.

admin — Tue, 31 Aug 2010 18:48:00 +0000

Personal Liability for failing to use Company Name

Please keep in mind that this is not legal advice. The information provided herein is for educational purposes only. If you would like to get in touch with a lawyer to help you draft, interpret, negotiate or resolve a dispute about a party’s failure to use the company name on invoices and contracts in Ontario, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers). We have Ontario lawyers who can assist you in this regard. If you’d like to buy a text link on this blog post, you can contact me directly.

So the running theme for today (because I’ve answered this question twice now for different clients) is: what happens if I don’t write my company’s name on invoices and contracts? Could I be held personally liable for breaches of those contracts or invoices?

Now the typical situation is you have a company called 123456 Ontario Inc. but you want to carry on business under a different name, such as ACME Enterprises. So in this situation, you have a boring numbered company (123456 Ontario Inc.) and you want to go out into the marketplace with a jazzy name (ACME Enterprises). Well, assuming you can use the jazzy name without violating trademarks, then you would need to REGISTER that name as a TRADE NAME under the Business Names Act. Why bother? Well, you still want to take advantage of having limited liability as a shareholder, director, and officer of the company, don’t you? Well then you need to register a TRADE NAME and then use both the TRADE NAME and the company’s name on invoices and contracts. You could write something like “[Company Name] carrying on business as [Trade Name]” or “[Company Name] c/o/b/ [Trade Name]“. The purpose of doing this is to signify to third parties that you are operating as a corporation and that they are dealing with a corporation instead of some other entity, like a sole proprietorship. It’s all about disclosure. Now, let’s get into what happens if you fail to do so…

We’ll start off with what the legislation says.

Business Names Act
Section 2(1) of the Business Names Act says that “No corporation shall carry on business or identify itself to the public under a name other than its corporate name unless the name is registered by that corporation.” OK, that’s a good start. So there’s a prohibition. And there’s a punishment if you fail to do so: under section 10 of the Act, everyone who contravenes section 2 without reasonable cause is guilty of an offence and on conviction is liable to a fine of not more than $2,000 or, if the person is a corporation, to a fine of not more than $25,000. OUCH!

OK, so what else is there?

Well, section 2(6) of the Act goes on to say that “A corporation and such other persons as are prescribed carrying on business under a registered name or, in the case of a corporation, identifying itself to the public under a registered name, shall set out both the registered name and the person’s name in all contracts, invoices, negotiable instruments and orders involving goods or services issued or made by the person.” OK, we’ve got a requirement! That requirement is for a corporation and other persons carrying on business under a REGISTERED NAME must set out both the corporate and registered name. Again, violating this section could lead to you being prosecuted by the government and being fined as per section 10 above.

Caselaw
So outside of what the legislation says (and government prosecutions for failing to register), what other consequences do you face? Could you face personal liability in a private lawsuit for breaching a contract which you believed your company (and not you) had entered into? YOU BETTER BELIEVE IT! This is where the courts come into play.

In City Press Inc. v. Green (c.o.b. B & G Print & Litho), [1996] O.J. No. 1823, the Divisional Court held that the principal of a corporation was PERSONALLY liable for over $19,000 for failing to disclose that a third party was dealing with his corporation and not him personally. In coming to that conclusion, the Court reviewed the caselaw concerning failing to identify your company in dealings (e.g. contracts and invoices) with third parties. Here’s what the Court had to say:

14 It would appear that one of the purposes of s. 2.(6) of the Business Names Act is to protect the public, and as a consequence if someone expects to take advantage of the limited liability available to him through the process of incorporation, he should make the public aware of the existence of such corporation in his dealings with other members of the public. This was one of the factors taken into consideration by the Court in imposing personal liability on the Defendant in Short’s Backhoe and Trucking Ltd. v. Noseworthy (1992) 101 Nfld. & P.E.I. Reports, p. 277.

15 It was noted in Excelco Foods Inc. v. Snider (1991) 95 Sask. R. p. 314 (Sask. Q.B.) p. 316 that if an individual wishes to escape personal liability on a contract, such a person has a duty to make it clear to the person with whom he is contracting that he is negotiating on behalf of his corporation and not in his personal capacity. In that case, the Court imposed personal liability on the Defendant who used the name of his business Candy Connection which was known to the plaintiff but tried to argue that his company Candy Connection Inc. should be liable. It should be noted that in that case, none of the invoices made reference to the Corporation as is the case in the matter before me.

16 Similarly in the case of Interlake Packers Ltd. v. Vogt and Loewen (1987) 47 Man. R. (2d) p. 268 (Man. Q.B.) the defendant was held to be personally liable for meat products sold and delivered by the plaintiff instead of his company E.V. Wholesale Meats Limited, because invoices were made out to E & V Meat Whls. and other similar names without the corporate entity being referred to.

17 The same finding was made in the case of W.R. Benjamin Products Ltd. v. Saulnier (1982) 40 N.B.R. (2d) 537 (N.B., Q.B.) where the Court indicated at p. 539:

“There is no clear evidence to satisfy me that the Plaintiff was ever made aware of the incorporation of the Defendant’s business or that it was doing business with a corporation. And that, in my opinion, is the determining factor.”

18 Similar conclusions were arrived at in the Ontario case of Victor (Can.) Ltd. v. Far Better Addressing and Mailing Ltd. et al (1978) 3 B.L.R. p. 312 (Ont. H.C.J.) by Morin J. who indicated that the Plaintiff would fully expect that it was dealing with an unincorporated business with “S” as owner and operator and personally liable to the Plaintiff upon the failure of “S” to indicate otherwise and in the British Columbia case of West Fraser Builder Supplies v. Vanderhorst [1990] B.C.W.L.D. 436 (B.C.C.A.).

Other and more recent Ontario cases have confirmed this decision. Most notably, in Truster v. Tri-Lux Homes Ltd. [1998] O.J. No. 2001, the Ontario Court of Appeal provided a two part analysis in determining the issue of liability when the existence of a corporation is not revealed at the time of making the contract. That two-part analysis is summarized as follows:

Did the individuals hold themselves as individuals or as an agent of a corporation and if so, did the individuals do it to a degree that attracted personal liability?
Is there sufficient evidence to indicate that, prior to closing, the other party to the transaction elected to look ONLY to the corporation to carry out the agreement once it became aware of the existence of the corporation? If not, then the individual may attract personal liability.

In Truster, the Court of Appeal said the following while talking about persons wishing to benefit from the protection of the corporate veil:

“They should identify the name of the company with which they are associated in a reasonable manner or risk being found personally liable if the circumstances warrant it: see cases such as Watfield International Enterprises Inc. v. 655293 Ontario Ltd., [1995] O.J. No. 1146, (1995), 21 B.L.R. (2d) 158 (Ont. Ct. (Gen. Div.)) and Pennelly Ltd. v. 449483 Ontario Ltd., [1986] O.J. No. 2672, (1986), 20 C.L.R. 145 (Ont. H.C.J.).”

The Court of Appeal noted that:

“This principle properly flows from the fact that incorporation provides corporate officers and shareholders a legal protection thought to be necessary for modern business relations; however, if one expects to benefit from this protection, then others must, at minimum, be informed in a reasonable manner, that they are dealing with a corporation and not an individual. In the last analysis, persons who set up after the fact that they contracted solely on behalf of another bear the onus of establishing that the party with whom they were dealing was aware of the capacity in which they acted: Clow Darling Ltd. v. 1013983 Ontario Inc., [1997] O.J. No. 3655 (Gen. Div.); Nord Ovest Spa v. Gruppo Giorgio Ltd., [1994] O.J. No. 1657 (Gen. Div.).”

Finally, the Court of Appeal said that, once a party becomes aware that a corporation may be involved, there must also be evidence of an intention on the part of that party to relieve the other party of its personal liability. If there is no such intention, then the individual may be personally liable for the alleged obligations of the corporation.

SO, in a nutshell, failing to property identify your corporation in invoices and contracts could lead to prosecution under the Business Names Act or private lawsuits against YOU PERSONALLY (and not just your corporation). If the lawsuit is against you personally, then you expose your personal assets in the event that you are liable to pay! OUCH! Better keep the corporate name on everything in that case!

Ontario LP Agreement (Part 15): Terms and Conditions of the Limited Partnership Agreement (Continued)…

admin — Tue, 31 Aug 2010 18:18:50 +0000

Ontario Limited Partnership Agreement Lawyer: Terms and Conditions

This is the second of a series of blog posts I’m writing about the terms typically found in a limited partnership agreement. In my first blog, I talked about the Introductory Clause, the Definitions and Interpretation, and the Name of the Limited Partnership. I’m going to continue my analysis by discussing the Term, Place and Description of Business, and Status of the General Partner in this blog. Again, if you need help in this regard, give me a shout!

Term of the Partnership
The Term has to deal with when the Limited Partnership is formed (i.e. upon the filing and receipt of the Form 3 Declaration under the Limited Partnerships Act) and how long it will survive for. Now, worth noting is that a Limited Partnership is, first and foremost, a partnership. This means that it is also governed by the Partnerships Act (so long as there is no conflict with the Limited Partnerships Act). Now, under section 26(1) of the Partnerships Act and at common law (i.e. judge made law), a partnership is considered to be a “partnership at will” unless some agreement to the contrary can be proved. “At will” means that the term of the partnership is determined at the will of the partners. So if a partner wishes to end the partnership, then they can do so by giving notice to all of the other partners of their intention to terminate. Section 26(1) has been interpreted in Patridge v. Seguin, [1991] O.J. No. 1355 to mean that, where the partnership agreement is silent as to the duration of the partnership, any partner may unilaterally terminate the partnership by giving notice. If, however, the partnership agreement provides for the termination of the partnership, then this section will not apply. As such, this section is subject to any agreement between the partners. So, to recap, if the partnership agreement specifies some manner in which to terminate the partnership (e.g. by mutual agreement, through a shotgun buy-sell provision, etc.), then that will mean that the partnership is not “at will” (i.e. cannot be terminated under section 26(1)) and the partnership agreement must be complied with in order to terminate the partnership.

Place and Description of Business
An Ontario limited partnership needs to have some place to hold its partnership records. Those records can be inspected by limited partners pursuant to rights afforded to them under the Limited Partnerships Act. The government also needs to know where to send service of documents. For these reasons, you should identify the principal place of business or head office of the Limited Partnership in the agreement (you’ll need to do so anyways in the Form 3 Declaration).

When it comes to describing the business affairs of the Limited Partnership, it all comes down to disclosure and authorization. Here, the Limited Partnership is disclosing its line of business (e.g. buying, trading, and holding securities and real estate). It is also authorizing its general partner to do those things which are necessary to give effect to its business activities. Perhaps the scope of authority of one or more general partners will be limited here? Perhaps the business of the limited partnership will not be able to change unless the limited partners consent (e.g. through a special 2/3 vote)? The idea is that the business of the partnership will be tailored to the specific needs and requirements of the general and limited partners. Some may want a narrow definition, while others may want it very broad. At the end, it will come down to what the parties want.

Status of the General Partner
Here, following up on the activities and business of the limited partnership, you’ll want to state that the General Partner is in charge of the limited partnership’s activities (and / or any limitation on those powers). You could, if you wanted to, state that the General Partner has unlimited liability (as per the Limited Partnerships Act). But you also want to state here what the General Partner is – typically a corporation incorporated under the province of [x]. You’ll also want the General Partner to indicate that it has all the necessary powers, approvals, and authorizations to act as the General Partner for the limited partnership and will not be in any conflict with internal or external documents or agreements as a result.

In another blog, I’ll continue my discussion of the terms found in a typical limited partnership agreement.

Limited Partnership Agreement Lawyer (Part 14): Terms and Conditions of the LP Agreement…

admin — Tue, 31 Aug 2010 02:57:40 +0000

Ontario Limited Partnership Agreement Lawyer: Terms and Conditions

So in this blog and the next few ones, I’ll be talking about some of the standard terms you can find a typical Limited Partnership Agreement. Again, if you need help in this regard, give me a shout!

Introductory Clause
This is the first clause in a Limited Partnership Agreement. It will include the date, the parties, and an indication that the agreement is a Limited Partnership Agreement. When I see things like “On the First Part”, “On the Second Party”, etc., I ask myself: “Why is this here? What purpose does it serve?” I don’t believe it’s helpful to include confusing and archaic language so I remove it. Worth mentioning is that the parties can be corporations; indeed, it is generally preferable and commonplace to see the General Partner (which has unlimited liability) as a corporation. The individuals who are the limited partners must be at least 18 years old. Remember: for a limited partnership to exist, there must be at least one general partner and one limited partner.

Recitals
This is where you can provide some information about the background and context for which the parties are entering into the agreement.

Organizing the Body of the Agreement
The body of the Agreement is typically broken down into Articles (main headings) and Sections (sub headings). I like to use the following breakdown: Article I – Definition and Interpretation, Article II – The Limited Partnership, Article III – Management of the Limited Partnership, etc. And within each article, I use Sections such as 1.01. Definitions, 1.02. Interpretation, etc. So lets dive into some of these Articles and Sections, shall we?

Definitions
Here, you can define terms used throughout the Agreement for ease of reference. Things like “Act” refer to the “Limited Partnerships Act“. The “Agreement” means the Limited Partnership Agreement, as amended, and Scheduled attached to it. “Business Day” means this and “Fiscal Year” means that. You get the point. PLEASE PLEASE be sure not to include terms that are not used in the Agreement. I see this all the time. It takes up space and adds nothing.

Interpretation
This part includes some pretty standard stuff about how the contract will be interpreted. For example, singular words can become plural, depending on the context. Same goes for masculine vs. feminine. There will also be a provision that states that Article and Section headings do not form part of the agreement for interpretation purposes, but are for convenience only.

The Name of the Partnership
There are a few things worth mentioning when it comes to the name of the limited partnership. First, you might want to consider doing a name search to see if the name is already in use by a business in the same or similar industry (which could cause confusion). If no such name exists, then the partners might want to consider trademarking it. Remember: if the surname or distinctive part of a corporate name of a limited partner is included in the limited partnership’s name, then that limited partner may be liable as a general partner: section 6(1) of the Limited Partnerships Act.

In the next blog, I’ll continue my discussion of the terms found in a typical limited partnership agreement.

Multiple Wills (Part 2): Validity of Using Multiple Wills in Ontario

admin — Mon, 30 Aug 2010 21:37:16 +0000

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to Wills and Estates matters, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you.

In my first blog, I discussed how you could generally use multiple Wills to avoid paying Estate Administration Taxes. In this blog, I’ll discuss how this came to be in Ontario and what Courts have recently said about using multiple Wills.

Granovsky Estate v. Ontario
We begin with the case of Granovsky Estate v. Ontario, [1998] O.J. No. 508. Here, the Ontario Divisional Court had to deal with the situation where a deceased had two Wills – one of which was probated (and estate administration taxes paid) and another one which was not probated (and no estate administration taxes were paid). The Crown (i.e. lawyers representing the government) wanted the assets in both Wills to be probated and estate administration taxes to be paid. The Estate Trustee resisted. At the end of the day, the Court agreed with the Estate Trustee. No Estate Administration Taxes were owing as the secondary Will did not have to be probated.

Here’s how the Court got there. The FIRST WILL distributed the bulk of the estate except for corporate share, any amounts receivable by him from those companies, and any assets held in trust for him by any of those companies; the SECOND WILL dealt with those corporate shares, amounts receivable and assets held in trust.

Now the big issue which the Court had to decide was whether the assets in the SECOND WILL needed to be probated and Estate Administration Taxes paid. The Court looked at the forms developed by the legislature for probate, other legislation, and observed that certain ASSETS did not have to be probated. These assets included: insurance policy payouts to designated beneficiaries, RRSP holdings for which the deceased has named beneficiaries under the appropriate beneficiary designation forms completed during her or his lifetime, jointly-owned assets (which devolve to the surviving co-owner upon death), real property situate outside of Ontario, and cash or bearer certificates.

Next, the Court had to determine whether it was legal for a Testator / Testatrix to make multiple Wills for different types of property. Having reviewed a lot of caselaw, the Court concluded that it was OK: “A testator may make any number of wills to deal with different types of property”.

Finally, and perhaps most importantly, was the issue of whether everyday folk are entitled to organize their affairs in order to reduce their Estate Administration Tax. Here, the Court unequivocally said: “Yes, you are!” Here are 2 key passages from this case worth repeating:

22 Therefore, the Act is not a taxing statute, but an administrative one. Even if, on appeal, probate fees were found to be a tax, Testators have unfettered discretion when dealing with their own assets in their Wills, subject to certain legal claims dependants may have against estates if they are not adequately provided for, and subject to the rights of the surviving spouse to take under the Will or elect against it. Testators therefore have the right to organize their affairs in a way which will allow their estates to pay as few probate fees or as few taxes as legally possible. They may give their assets away immediately before death, they may settle inter vivos trusts whereby the capital does not revert to their estates on their deaths, they may transfer realty into the joint names of themselves and others with right of survivorship, they may register securities and/or bank accounts in joint names with right of survivorship, and they may name designated beneficiaries under plans of insurance and pension schemes and ISPs. None of these assets are included by estate trustees when they value assets for probate purposes, as they do not fall under the aegis of the estate trustees to distribute at death. All are aspects of estate planning in the testator’s lifetime which take effect at death.

23 The estate planning of having multiple Wills in the form of a Primary Will and a Secondary Will which take effect on death is, in my view, simply another example of how a careful testator plans to have her or his estate pay the least possible probate fees on death. There is no legal obligation to obtain probate and, as I have noted above, limited grants are permissible. If the directors of the private companies in which the deceased owns shares or has an interest at death do not require the formal grant from the Court to deal with the transmission of the assets and are prepared to deal with the estate trustees named in the Secondary Will, why then should the estate have to pay probate fees on those assets?

Overall, the deceased’s estate was not required to probate the SECOND WILL or pay Estate Administration Taxes in respect of the assets thereunder. SWEET!

So, if that happened all the way back in 1998, what is the current state of the law? Has it changed? Nope. In Kaptyn Estate v. Kaptyn Estate, [2010] O.J. No. 3347, the Ontario Superior Court of Justice reiterated the findings in Granovsky Estate v. Ontario:

55 A testator may use multiple wills to govern the disposition and administration of different pools of assets he owns at the time of death. Multiple wills have enjoyed a long history where a testator owned assets located in different jurisdictions. During the 1990s in Ontario multiple wills emerged as a device by which to divide assets into different pools as a means to reduce the probate fees that would otherwise be payable. As Greer J. observed in Granovsky Estate v. Ontario: “Testators therefore have the right to organize their affairs in a way which will allow their estates to pay as few probate fees or as few taxes as legally possible.” … Greer J. concluded that where the executors under one multiple will had no need for probate to deal with the assets identified in that will, no requirement existed for them to pay probate fees on the assets governed by it.

56 Multiple wills are very flexible documents which a testator can use to establish a variety of regimes to govern the disposition of his property on his death. A testator can draft multiple wills to create distinct pools of assets administered by different sets of executors.

Overall, the Ontario courts have confirmed that avoiding probate is now a standard part of estate planning in Ontario. Wills are no longer submitted for probate as a matter of course.