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 on your agreement of purchase and sale or on the deposit specifically, 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 review your agreement of purchase and sale or the deposit and advise accordingly.

Generally, the deposit a buyer puts down in respect of an agreement of purchase and sale is only released by the listing brokerage in very limited circumstances, including:

• performance and completion of the Agreement of Purchase and Sale;
• a term or condition concerning the deposit in the Agreement of Purchase and Sale;
• a mutual release signed by all the parties; or
• court action concerning the deposit leading to a judgment.

If the Agreement of Purchase and Sale is silent on specifically what happens to the deposit on termination, courts will generally take the view that, if the buyer defaults, then the deposit is forfeited to the seller. If the seller defaults under the agreement, however, the deposit is returned to the purchaser (unless the agreement says otherwise). Finally, if the agreement is frustrated because of some event or condition that arises beyond the control of the buyer or seller, then the purchaser is entitled to the return of his or her deposit (unless the agreement says otherwise).

Where the purchaser defaults, there is no requirement for the seller to prove damages. This means that, even in the case where the seller resells at a purchase price that is high enough to compensate for any loss from the first sale, the seller may nevertheless retain the deposit.

Whether a Court will return a deposit to a defaulting purchaser depends on a three-part test – all of which must be satisfied in favour of the purchaser for the deposit to be returned:

• Was the conduct of the purchaser reasonable in the circumstances?
• Was the purpose of the deposit to secure the payment of the purchase price?
• Was there a substantial disparity between the value of the property forfeited and the damage caused to the seller by the breach?

In Gajasinghe v. Dewar, 2007 CarswellOnt 5738, the Ontario Superior Court of Justice applied this three part test and refused to return a $20,000 deposit to the defaulting purchaser. Although the Court found that the purpose of that deposit was to secure the purchase price and that there was a substantial disparity between the amount of the deposit and the amount of damages suffered by the seller, the purchaser’s conduct was not reasonable.  Specifically, the Court found that the purchaser’s actions were “indicative not of a purchaser who was ready and willing to close but rather of one who was searching for an excuse not to close”.

Generally, the deposit is only released by the listing brokerage in very limited circumstances, including:

• performance and completion of the Agreement of Purchase and Sale;
• a term or condition concerning the deposit in the Agreement of Purchase and Sale;
• a mutual release signed by all the parties; or
• court action concerning the deposit leading to a judgment.

If the Agreement of Purchase and Sale is silent on specifically what happens to the deposit on termination, courts will generally take the view that, if the buyer defaults, then the deposit is forfeited to the seller. If the seller defaults under the agreement, however, the deposit is returned to the purchaser (unless the agreement says otherwise). Finally, if the agreement is frustrated because of some event or condition that arises beyond the control of the buyer or seller, then the purchaser is entitled to the return of his or her deposit (unless the agreement says otherwise).

Where the purchaser defaults, there is no requirement for the seller to prove damages. This means that, even in the case where the seller resells at a purchase price that is high enough to compensate for any loss from the first sale, the seller may nevertheless retain the deposit.

Whether a Court will return a deposit to a defaulting purchaser depends on a three-part test – all of which must be satisfied in favour of the purchaser for the deposit to be returned:

• Was the conduct of the purchaser reasonable in the circumstances?
• Was the purpose of the deposit to secure the payment of the purchase price?
• Was there a substantial disparity between the value of the property forfeited and the damage caused to the seller by the breach?

In Gajasinghe v. Dewar, 2007 CarswellOnt 5738, the Ontario Superior Court of Justice applied this three part test and refused to return a $20,000 deposit to the defaulting purchaser. Although the Court found that the purpose of that deposit was to secure the purchase price and that there was a substantial disparity between the amount of the deposit and the amount of damages suffered by the seller, the purchaser’s conduct was not reasonable.  Specifically, the Court found that the purchaser’s actions were “indicative not of a purchaser who was ready and willing to close but rather of one who was searching for an excuse not to close”.

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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 joint venture, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers).  We have Toronto and Ottawa lawyers who can assist you in this regard (I would know, I’m one of them!).

So this blog will deal with the basics of a joint venture agreement or contract.  In other blogs, I’ll get down to the nitty gritty.

Definition
Plaint and simple, a joint venture is a contract between two or more parties to share resources, knowledge, skills, etc. towards a common objective.

Parties
As usual in these types of agreements, the parties are identified at the get-go (make sure this is done properly or else your contract won’t be worth the paper it’s written on!).

Recitals
This is the background story you want to tell that leads up to the formation of the joint venture.  It could go something like: Party X does Y and has Z.  Party A does B and has C.  The two would now like to join forces to make even more $$$.  So they’re agreeing to have a joint venture in accordance with the terms and conditions set out in the joint venture agreement or contract…

Definitions
It’s a good idea to set out the definitions you’re going to be relying upon near the top of the joint venture agreement (for ease of reference and good organization).  You could include definitions here about “Confidential Information” (assuming there will be confidential information passed between the parties as a result of the joint venture), what constitutes “Force Majeure” (e.g. act of God that relieves a party of liability under the agreement in certain circumstances), etc.

Business Structure
The joint venture agreement or contract will generally state how the joint venture is structured.  Is it simply two separate entities acting in concert through the joint venture agreement or contract?  Will there be a new corporation formed?  Will there be a partnership formed?  Will that partnership be a general or limited liability partnership?  For more discussion about the general forms of business one can structure in Ontario, check out this free information about business structures we’ve been accumulating.

Nature of the Relationship
So will the joint venturers be partners (capable of binding each other), corporate shareholders, or simply joint venturers (i.e. their rights and obligations are limited to the terms of the joint venture agreement or contract).

Term and Termination
How long will the joint venture last for and what events give rise to its premature termination?  Will the parties simply be able to give each other notice?  Will the joint venture dissolve by operation of law, by one party filing for bankruptcy, by one party attempting to illegally assign their interest in the joint venture to a third party, etc.?  Again, you should consult with a lawyer to find out what kinds of things typically go in this section.  Also important is what to do in the even of default.  Does one of the joint venturers become liable to pay the other if they are at fault?  Who determines fault and according to what test (e.g. sole and absolute discretion)?  There’s a lot to think about here…

Joint Venture Assets and Benefits
How will these things be deal with?  Will there be a percentage of ownership?  Will the benefits be based on revenues or profits?  Can these interests be assigned?

Operations
How will the joint venture be operated on a day-to-day basis?  Will the joint venture committee have the power to enter contracts on behalf of the joint venture?  Perhaps the joint venture committee will create a new corporation to take on a certain responsibilities and simply own equally the shares of the new corporation.  That new corporation would operate as a separate business, but its shareholders would be the joint venturers (who would elect the directors, who in turn would appoint the day-to-day officers).  This would be a good place to put reporting and record-keeping requirements too.

Joint Venture Responsibilities
Here, we get to the nitty gritty of who will be responsible for what in the joint venture. Separate paragraphs will be needed for each of the parties.

Joint Venture Management
Will there be a committee?  Will representatives from each of the parties be on the commitee?  Will there be a chairperson?  How will meetings be managed, votes and decision made?  Will there be direction from owners and delegation to the committee?  In my opinion, and as I’ve previously blogged about, businesses should be run as dictatorships with consultants, not as democracies (too many voices means things won’t get done).  

Representations and Warranties
What kinds of true, fair, and complete statements must the parties make to induce the other parties to enter the agreement?  The parties want to know that their joint venturer partners have the authorization and operational wherewithall to do what it is they are about to do.  If these representations and warranties no longer hold true, then what’s the consequence?  Notice?  Termination?  This should be spelled out here…

Liability and Indemnification
Will the joint venturers try to limit their liability from each other in connection with the joint venture?  Will they indemnify each other for their own wrongdoing – whether in contract, tort, negligence, misconduct, breach of statute or otherwise?

General Terms and Conditions
This section of the Joint Venture Agreement will deal with things like (which I’ve previously touched on in teh context of an independent contractor agreement):

• Notices
• Entire Agreement
• Governing Law
• Interpretation
• Assignment
• Waiver
• Cumulative Remedies
• Counterparts
• Enurement
• Entire Agreement
• Time of Essence
• Independent Legal Advice
• Force Majeure
• Severability
• Survival
• Currency

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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 or reviewing Articles of Incorporation, you should seek professional assistance (e.g. make a post on Dynamic Lawyers).  We have Toronto business lawyers registered on the website who can answer your questions or help you draft and submit articles of incorporation for Ontario or Federal corporations.

Incorporating a business: a few words should be written about the roles and responsibilities of those involved with and acting on behalf of or for the corporation.

A corporation is created by having the initial directors file articles of incorporation in the jurisdiction in which the corporation is going to have its head office (provincial licenses will also be required to operate the corporation in particularly provinces).

After this, the directors have got a few things to do to get the corporation organized and up and running.  For example, they will need to pass a By-Law (which gives the corporation’s directors power-making authority), pass director resolutions, issue shares to shareholders (and have the shareholders subscribe to shares), have the shareholders ratify the by-law, have the shareholders vote in the new directors, etc.  Without these essential steps and documents, a corporation is not a legally operational entity.

The board of directors is comprised of individuals and typically a chairperson who oversee the affairs of the corporation , but not typically on a day-to-day basis.  The directors are typically paid to sit on the board, but it’s not a lot of money (as compared with the corporate officers) because they don’t meet that often and are not responsible for the day-to-day affairs of the corporation (as officers are).  The board is typically comprised of individuals with expertise in certain areas and who sit on a number of corporate boards.  They offer their insight and are accountable to the shareholders who vote them in.

For their part, shareholders are the owners of the corporation and have the power to vote in the directors of the corporation.  If there is only one sole shareholder holding all of the shares of the corporation then that person could vote in all of the directors.  It is possible to have only one shareholder and one director of a corporation.

Finally, officers of a corporation are appointed by the board of directors in order to oversee the day-to-day management of the corporation’s affairs.  The titles of officers are not that important, although traditionally most people have come to know officers as one of the following: President, Chief Executive Officer, Treasurer, Chief Financial Officer, Secretary, Vice-President, etc.  It does not really matter what these individuals are called.  Often, their titles, roles, and responsibilities will be outlined in a corporate by-law, which establishes their position and sets out their qualifications, powers, duties, etc.  Officers can be replaced by the board of directors, to whom they are accountable.

So to summarize: shareholders with voting power will vote in the directors on an annual basis (or sooner in certain circumstances), directors have the power to manage the corporation and they meet only a few times a year, and officers (e.g. CEO, VP, CFO, Treasurer, President, etc.) are the people who run the corporation on a daily basis and who are appointed (not elected) by the directors on an annual (or sooner in certain circumstances) basis.

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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 creating a limited liability company, you should seek professional assistance (e.g. make a post on Dynamic Lawyers).  We have Toronto business lawyers registered on the website who can answer your questions or help you draft and submit articles of incorporation for Ontario or Federal corporations.

Want to know to incorporate?  First, if you’re trying to do it yourself, it’s pretty straightforward.  You just need to figure out which jurisdiction you’re trying to incorporate and then use a website service provider that will allow you to submit articles of incorporation, conduct a NUANS name search and submit a NUANS name search report, etc.  While the government fees are not high to incorporate (e.g. $200 for a federal corporation, plus $20 for a NUANS name search report), there are a number of questions arise which may lead you to seek out answers to questions relating to how to incorporate.

For example, you may have questions concerning what exactly goes into the Articles of Incorporation.  You can find a previous blog about Articles of Incorporation here. “Articles of Incorporation” is the name of the document that must be submitted to the Federal Government to create a corporation.  A corporation is a separate and distinct legal entity from its incorporators and from its owners, managers, employees, etc.  A corporation has its own rights and obligations; must file its own taxes (at both the provincial and federal levels); has its own income, assets, and liabilities; and can be sued and sue other parties.  These things being said, a corporation must act through other parties (e.g. owners, managers, employees, directors, etc.), who can in turn be held liable for their actions (e.g. negligence, breach of contract, etc.), although the corporation will likely be sued in these circumstances because of things like vicarious liability, insurance, and its otherwise deep pockets.

But simply submitting and having the government approve of your incorporate package is not sufficient to have your company up and running.  In fact, the cheap incorporation companies out there that promise to incorporate your company may not help you establish by-laws (which are power-giving or authority-giving documents that make corporate actions legal), prepare director and shareholder meetings and minutes (which establish accountability and transparency by letting stakeholders know what was decided upon), and finish explaining each party’s (i.e. shareholders, directors, officers, employees) roles and responsibilities vis-a-vis the corporation. Knowing how to incorporate is a good start,  but it’s always wise to consult with a business lawyer (e.g. by making a post on Dynamic Lawyers) with respect to questions about these and other things corporation related.

The roles of the various parties in a corporation will be discussed in the next post…

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Toronto law firms can help answer your legal questions, facilitate your transaction (e.g. business, real estate, wills and estates, family, etc.) or even represent you in court.  To find a Toronto lawyer or law firm, go to Dynamic Lawyers and make a post.  It’s free and anonymous and Toronto lawyers and law firms will respond to you with information and quotes for you to compare.

Here are some of the different types of law that Toronto law firms can assist you in:

• Accidents and Injuries: Involved in an accident where you suffered personal injury?
• Business: Need corporate or commercial agreements? Need to have a lawyer help you do a transaction?
• Charities and Not-For-Profit: Need to establish a Not-For-Profit corporation or obtain charity status?
• Civil Litigation – Higher Court: Have a serious legal claim that needs to be litigated in the Superior Court, Divisional Court, etc.?
• Civil Litigation – Small Claims Court: Have a legal claim (e.g. breach of contract, negligence, etc.) for less than $10,000?
• Constitutional / Human Rights and Freedoms: Challenging a law or government action / inaction?
  Criminal: Charged with a criminal offence? Appealing a conviction?
• Employment and Labour: Need an employment agreement? Unjustly terminated? Need to know your rights?
• Family: Going through a separation or divorce? Fighting to get custody or access? Dealing with spousal and child support?
• Government: Need to lobby the government? Need to resolve a dispute with a government agency?
• Highway Traffic Tickets: Charged with speeding or DUI? Need to fight traffic tickets?
• Immigration: Need to immigrate to Canada? Fighting against deportation?
• Insurance: Having difficulties with your Insurance company?.
• Intellectual Property: Need to register a copyright or trademark? Need help with a patent?
• Landlord and Tenant: Need a resolve a dispute? Need to know your rights?.
• Notary Public / Commissioner: Need to notarize or commission your documents?
• Real Estate: Need someone to facilitate your residential or commercial purchase, sale, or lease?
• Tax: Need help structuring your tax affairs? Need help resolving tax disputes with the Canada Revenue Agency?
• Wills, Estates and Trusts: Need a will? Need to update your will? Find out why having an up-to-date will is a must.

Try to consult with a couple of Toronto law firms and Toronto attorneys until you’re comfortable with whom you’re speaking with.  Toronto law firms differ in size, location, expertise, and reputation.  Go to Dynamic Lawyers and save time and money finding the right Toronto law firms and Toronto attorneys who specialize in the legal area you require!

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Please keep in mind that this is not legal advice.  The information provided herein is for educational purposes only.  If you believe you require assistance in reviewing, drafting, negotiating, etc. a Confidentiality and Non-Disclosure Agreement, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers).

Confidentiality and Non-Disclosure Agreements (also known as NDAs) are nothing more than ordinary contracts with specific terms related to the idea that one party (disclosing party) is going to provide information of a confidential nature to the other party (receiving party).  Breach of a Confidentiality and Non-Disclosure Agreement may result in a claim that can be enforced by going to court, through equitable remedies such as an injunction, or as otherwise set out in the agreement itself (e.g. arbitration, etc.).  In what follows, I’ll provide some general issues that are dealt with in these types of agreements.

1. Consideration
Like all commercial agreements, a Confidentiality and Non-Disclosure Agreement requires something that’s called “consideration”.  Consideration is something of value given by both parties to a contract that induces them to enter into the agreement.  Consideration is typically something like money for goods or services, etc.  One party receives something of value and the other party receives something of value.  This makes the contract valid, binding, and enforceable.  For a Confidentiality and Non-Disclosure Agreement, the consideration will likely be part of the overall agreement (e.g. I will give you confidential information to do something and then I’ll pay you in exchange for that something).

2. Definition of Confidential Information
Defining confidential information is of utmost importance.  The disclosing party will cast the net wide here to increase the receiving party’s obligations and liability with respect to the information it receives; the opposite is true of the receiving party (who wants a narrow definition of confidential information). Examples of types of confidential information include trade secrets, proprietary information, know-how, or information described in a Schedule. Use of a Schedule should still include an accurate definition of confidential information.  Sometimes, a disclosing party will also say that anything it labels confidential will be considered confidential information as well.

3. Exclusions from Confidential Information
Most confidentiality agreements will normally contain various exclusion clauses which outline the types of information which are deemed not to be confidential within the terms of the agreement.  Generally, these types of exclusions will include:

• information which is publicly available (i.e. information in the public domain);
• information which is already known to the recipient at the time of its disclosure to the recipient by the information provider;
• information which is received by the recipient from a third party who is not in breach of any confidentiality obligations to the information provider;
• professional expertise which the recipient had at the time of disclosure or which the recipient developed or enhanced as a result of reviewing the information or material provided; and
• information which the recipient is required by a court or regulatory body to disclose.

4. Limitations on Use of Confidential Information
The uses the receiving party is permitted to make of the confidential information should be clearly specified in the agreement. This will ensure that the recipient does not use the information for any other purpose.

5. Who Should be Bound by the Confidentiality Agreement
A Confidentiality and Non-Disclosure agreement may need to bind all relevant parties (e.g. parent companies, subsidiary companies, directors, officers, employees, representatives, etc.).  In many cases, it is not practical or necessary to obtain signatures from all relevant parties; in these cases, the receiving party should acknowledge and assume responsibility for making sure that these relevant parties comply with the agreement.

6. Required Protective Measures to be Taken by Recipient
The Confidentiality and Non-Disclosure agreement may include a provision requiring the receiving party to take all reasonable measures available to it to keep the confidential information in the strictest confidence.  Such reasonable steps may include:

• Electronic security (e.g. confidential information may be stored on a computer, server, network, cell phone, etc.);
• Physical security (e.g. confidential information may be in a filing cabinet, on a desk, in a box, etc.);
• Visitor control;
• Controls over photocopying confidential information; and
• Document and computer network control systems which limit access to the confidential information to those who are cleared for such access.

7. Return of Confidential Information
The Confidentiality and Non Disclosure Agreement may need to specify that, upon request, all of the confidential information, in whatever format, should be returned to the information provider and that all memoranda or other ancillary documents prepared by the recipient and based on the confidential information be destroyed.

8. Injunctive Relief
An injunctive relief clause may be included wherein the receiving party acknowledges that monetary damages may be an insufficient remedy and that the disclosing party should be entitled to injunctive or other equitable relief for any breach of the Confidentiality and Non-Disclosure agreement. In most cases where confidential information is being disclosed, the disclosing party cannot wait until a court determines the amount of monetary damages suffered. Here, the disclosing party will want to immediately apply for an injunction prohibiting any further disclosure of the confidential information.

9. No Liability Regarding Information
The agreement should make it clear that the disclosing party is making no warranty or other commitment regarding the accuracy or completeness of any information provided, and that there is in fact no obligation to provide any particular information to the other party.

In case you’re looking for an Ontario Mutual or One-Sided Confidentiality Agreement, then look no further:

Confidentiality and Non-Disclosure Agreement (Mutual)

This Agreement can be used to restrict both parties’ use and disclosure of confidential information that is being provided to it. If only ONE party is sharing confidential information and want to restrict the other’s use and disclosure of that information, then you can purchase a ONE-SIDED Confidentiality and Non-Disclosure Agreement:

Confidentiality and Non-Disclosure Agreement (One-Sided)

Here’s the sample Video Guide that comes with the Confidentiality and Non-Disclosure Agreement (Mutual):

Here’s the sample Video Guide that comes with the Confidentiality and Non-Disclosure Agreement (One-Sided):

All of Dynamic Lawyers‘ legal forms are lawyer-prepared, simple to read, easy to customize, and only a fraction of the price a lawyer would charge. Also, each legal form comes with a FREE VIDEO GUIDE (watch a useful example of how this legal form can be customized), a FREE DL GUIDE (read helpful information about this legal form), and another FREE DL GUIDE that sheds valuable insight into how legal forms can be challenged. What are you waiting for? Best of all, if you DO need a lawyer and need some legal advice, simply make a post and get FREE quotes from Ontario lawyers focusing on the area of law you require!

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