Non Resale Agreement Template for Canada

A Non Resale Agreement is a legal contract that restricts the buyer's ability to resell purchased products or services to third parties. Under Canadian law, this document helps suppliers maintain control over their distribution channels while ensuring compliance with federal competition legislation and provincial commercial regulations.

When do you need this document?

You need a Non Resale Agreement when selling specialized equipment that requires specific training or certification for proper use, such as medical devices or industrial machinery. This document is essential for manufacturers distributing to research institutions or educational facilities where products are intended for internal use only. You should also use this agreement when dealing with licensed products, controlled substances, or proprietary technology where unauthorized resale could compromise quality standards or regulatory compliance. Original Equipment Manufacturers (OEMs) frequently require these agreements when supplying components to other manufacturers to prevent market competition issues. Additionally, service providers often use non-resale clauses when providing software licenses or technical solutions intended for the buyer's exclusive use.

Key legal considerations

Your Non Resale Agreement must comply with the Competition Act to avoid anti-competitive behavior allegations. The agreement should clearly define what constitutes "resale" and specify permitted uses, including internal consumption, research, or incorporation into other products. You need to include reasonable enforcement mechanisms and remedies for breach, such as termination rights and damages provisions. The contract should specify the duration of restrictions and any geographical limitations that apply. Consider including quality control provisions that justify the resale restrictions, as these can strengthen the agreement's enforceability. You should also address what happens to unused products and whether returns or exchanges are permitted under specific circumstances.

Legal requirements in Canada

Under federal law, your agreement must not violate the Competition Act's provisions regarding vertical restraints and anti-competitive practices. Each province's Sale of Goods Act governs the transfer and restrictions on goods, so you need to ensure your terms comply with the specific provincial legislation where the transaction occurs. In Quebec, the Civil Code governs contractual obligations and may impose additional requirements for sale restrictions. Consumer Protection Acts across provinces may limit the enforceability of resale restrictions when dealing with end consumers rather than commercial buyers. Your agreement should include proper identification of all parties with full legal names and addresses, clear definitions of restricted products, and specific consequences for non-compliance. Government agencies and healthcare providers may be subject to additional regulatory requirements that affect the agreement's terms and enforceability.