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Author Archives / Geoff R. Hall

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Sandbagging in Good Faith: How Bhasin v Hrynew Can Impact Indemnification for Known Breaches

Posted in Contractual Matters, Strategy

In the context of a merger or acquisition, a vendor may unknowingly make untrue representations about the target business. “Sandbagging” occurs when a buyer discovers such misrepresentations prior to closing and seeks to enforce indemnity provisions after closing.  The success of such claims will depend on the following:

  • The Terms of the M&A Agreement. If the parties expressly agree that the buyer’s knowledge will (or will not) bar post-closing indemnification, Canadian courts will consider, and likely respect, the parties’ intentions.
  • The Common Law. In Bhasin v Hrynew (“Bhasin”), the Supreme Court of Canada articulated a general duty of
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Reasonable Efforts vs. Best Efforts – Why the Fuss?

Posted in Contractual Matters, Strategy

Last fall, we featured a blog post that offered a Canadian perspective on the interpretation and use of benchmarking in efforts clauses. Some of the commentary that ensued suggests that Canadian courts were “doomed to incoherence” by distinguishing between best efforts and reasonable efforts.[i]

Yet this distinction between efforts clauses has existed for some time in Canadian jurisprudence[ii] and Canadian courts have continued to render coherent decisions with very little difficulty in applying the standards of performance to efforts clauses.[iii] This leads to the reasonable conclusion that, in fact, there is no crisis and no reason to … Continue Reading

Materiality in Securities Legislation: Four Points from the Supreme Court of Canada

Posted in Public M&A

One of the issues in securities law generally is what constitutes “materiality”. In a later post we will discuss “material adverse change” clauses in M&A agreements, but this post is about the fundamental question of what is “material”. A recent case of the Supreme Court of Canada, Sharbern Holding Inc. v. Vancouver Airport Centre Ltd. provides some guidance. In Sharbern, the Supreme Court looked at the test of what constitutes a “material false statement.” While the Court was looking at a real estate related statute, the principles are similar under securities laws. Sharbern imposes burdens on plaintiffs and issuers … Continue Reading