Definitive Purchase Agreement for Canada

Definitive Purchase Agreement Template for Canada

A comprehensive legal agreement governed by Canadian law that finalizes the terms and conditions for the purchase and sale of a business, its assets, or shares. This document serves as the primary transaction document in M&A deals, incorporating detailed provisions for purchase price, payment terms, representations and warranties, conditions precedent, and post-closing obligations. It reflects Canadian legal requirements and practices, including compliance with federal and provincial regulations, competition laws, and industry-specific requirements. The agreement typically includes extensive schedules and exhibits detailing specific aspects of the transaction.

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What is a Definitive Purchase Agreement?

The Definitive Purchase Agreement is the cornerstone document in merger and acquisition transactions under Canadian law. It is used when parties have moved beyond preliminary agreements (such as letters of intent) and are ready to document the final terms of a business purchase transaction. This agreement is essential for transactions involving Canadian businesses or assets, requiring compliance with both federal and provincial laws, including the Competition Act, Investment Canada Act, and various provincial commercial laws. The document typically follows extensive due diligence and negotiations, containing detailed provisions about the transaction structure, purchase price, representations and warranties, conditions to closing, and post-closing obligations. It serves as the primary reference point for all aspects of the transaction and is crucial for protecting both buyers' and sellers' interests throughout the acquisition process.

What sections should be included in a Definitive Purchase Agreement?

1. Parties: Identifies and provides full legal names of all parties to the agreement

2. Background/Recitals: Sets out the context and purpose of the agreement

3. Definitions: Defines key terms used throughout the agreement

4. Purchase and Sale: Details the assets or shares being purchased and basic transaction structure

5. Purchase Price and Payment: Specifies the purchase price, payment terms, and any adjustments

6. Closing: Details the closing mechanics, timing, and deliverables

7. Representations and Warranties of the Seller: Seller's statements of fact and assurances about the business and assets

8. Representations and Warranties of the Buyer: Buyer's statements of fact and assurances

9. Covenants: Pre-closing and post-closing obligations of the parties

10. Conditions Precedent: Conditions that must be satisfied before closing

11. Indemnification: Rights and obligations regarding compensation for losses

12. Termination: Circumstances under which the agreement can be terminated

13. Dispute Resolution: Procedures for resolving disputes

14. General Provisions: Standard boilerplate provisions including notices, amendments, governing law

What sections are optional to include in a Definitive Purchase Agreement?

1. Employee Matters: Required when the transaction involves transfer or termination of employees

2. Real Estate: Required when the transaction includes real property

3. Intellectual Property: Detailed IP provisions when significant IP assets are involved

4. Environmental Matters: Required for businesses with environmental risks or liabilities

5. Tax Matters: Detailed tax provisions for complex tax structures or implications

6. Transition Services: Required when seller will provide post-closing services to buyer

7. Non-Competition: Required when restricting seller's future competitive activities

8. Financing Contingency: Required when purchase is contingent on buyer obtaining financing

9. Working Capital Adjustment: Required when purchase price includes working capital adjustment

10. Earn-out Provisions: Required when part of purchase price is contingent on future performance

What schedules should be included in a Definitive Purchase Agreement?

1. Disclosure Schedule: Exceptions to representations and warranties

2. Asset Schedule: Detailed list of assets being purchased

3. Excluded Assets Schedule: List of assets explicitly excluded from the transaction

4. Assumed Liabilities Schedule: List of liabilities being assumed by buyer

5. Excluded Liabilities Schedule: List of liabilities explicitly excluded from assumption

6. Material Contracts Schedule: List of important contracts being assigned

7. Intellectual Property Schedule: List of IP assets included in the transaction

8. Real Property Schedule: Details of real estate included in the transaction

9. Employee Schedule: List of employees and employment terms

10. Required Consents Schedule: List of third-party consents needed for closing

11. Purchase Price Allocation Schedule: Breakdown of purchase price allocation for tax purposes

12. Form of Bill of Sale: Form document for transferring assets

13. Form of Assignment and Assumption Agreement: Form document for assigning contracts and assuming liabilities

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Sales Contract

Sector

Sales

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Manufacturing

Technology

Real Estate

Healthcare

Retail

Financial Services

Energy

Mining

Agriculture

Transportation

Professional Services

Consumer Goods

Industrial

Telecommunications

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Development

Mergers and Acquisitions

Due Diligence

Risk Management

Compliance

Strategy

Tax

Operations

Human Resources

Information Technology

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Lawyer

M&A Director

Business Development Director

Finance Director

Corporate Secretary

VP of Corporate Development

Transaction Manager

Due Diligence Manager

Integration Manager

Chief Operating Officer

Risk Manager

Compliance Officer

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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