Lawyer’s Advice - Legal Issues to Consider When Buying or Starting a Business in Fort McMurray

Starting or purchasing a business can be exciting and complex. As a business owner, you will have many logistical considerations to operate the business and will need to consider potential growth, contraction and/or evolvement into another area. A common thread running through all elements of running a business is ensuring that all steps are taken legally, and that you protect yourself and your business in the face of any legal risks and challenges.

Starting or purchasing a business can be exciting and complex. As a business owner, you will have many logistical considerations to operate the business and will need to consider potential growth, contraction and/or evolvement into another area. A common thread running through all elements of running a business is ensuring that all steps are taken legally, and that you protect yourself and your business in the face of any legal risks and challenges.

Some of the legal issues to consider include the type of legal structure, intellectual property considerations, employment and insurance needs, leasing commercial space, and seeking equity financing. If you are purchasing a business, you will also want to ensure you understand the purchase and sale terms. Navigating through the legal issues is not always simple. Consulting with a business lawyer in Fort McMurray may be your best option.

Form of Business Organization

If you are starting a business, you will need to select which structure to use - sole proprietorship, partnership, or corporation. Each type of business organization carries distinct advantages and risks. The choice that is best suited for your business depends on many factors, including your business’ expected income, the nature of your business loans, and the risks (including legal risks) inherent in your business.

Intellectual Property Considerations

When choosing a business name, logo, slogan, or trademark, you need to ensure that you do not overstep the boundaries made by pre-established businesses. To do so can result in legal consequences, and unexpected hurdles if you are forced to re-brand. For example, in Walt Disney Productions v. Triple Five Corp. et al., 1992 CanLII 2823 (AB QB), West Edmonton Mall tried using the name “Fantasyland” for its amusement park. Disneyland was successful in bringing an injunction to bar the mall from using the name, which was used at Disney’s central theme park in California. The mall was ordered to pay legal costs from the litigation and they also had costs associated with re-branding.

A lawyer can help you understand which searches and due diligence steps need to be taken to ensure that your business’s name, trademarks and product are in the clear.

Hiring Practices and Employment Contracts

If need outside assistance for your business, you will want to think about how to structure contracts with employees and/or contractors; the legal implications of these arrangements are different. Hiring employees means your staff have certain rights pursuant to the Employment Standards Act, and at common law, when it comes to the termination of their employment, vacation time, overtime pay, and other issues.

By contrast, independent contractor agreements allow you to hire individuals for a discrete period of time, without any obligation to them once the terms of the contract are fulfilled. You must be careful about ensuring that you can comply with the duration of the contract and any other onerous terms.

Insurance

For many businesses, certain types of insurance are required, or at the very least, beneficial from a risk perspective. For example, if you are operating in a professional capacity — whether as a doctor, lawyer, accountant, engineer, or in another regulated profession — you require a current professional liability insurance policy that you are abiding by.

If you operate a physical space where employees work, and/or where customers and clients attend, you may need a commercial general liability policy (“CGL”). A CGL will cover your business and provide a legal defence in the event that your business is sued for injury that takes place on your business’ property. It will often also cover losses incurred due to unexpected and unavoidable business interruptions.

As diligent as you and your employees may be in operating your business, accidents do occur, and a relatively high burden is placed on business owners to ensure that their businesses are kept hazard-free. In Swagar v Loblaws Inc. (The Real Canadian Superstore), 2014 ABQB 58 (CanLII), something as seemingly trivial as a broken egg on the supermarket floor resulted in a $45,000 damages award to the plaintiff, who was injured slipping while shopping at Loblaws— and that case involved a very minor injury.

Commercial Lease

A lease is commonly a large expense that is fixed for a few years and yet your business may need flexibility, especially if you need to break the lease because the property doesn’t suit your needs anymore. Contact a lawyer to find out about the potential pitfalls or costs that may be incurred before you agree to sign the lease terms provided to you.

Equity Financing

If you plan to seek equity financing for your business, our Fort McMurray law firm can draft the terms of a shareholder agreement for you and/or we can review the documentation provided by a potential investor. We can also help you to assess if a new shareholder agreement will impact your other obligations made with employees, suppliers or financial institutions.

Purchase and Sale Agreement Terms

If you are purchasing a pre-existing business, you will want to be clear about the terms of the agreement, how to evaluate the business, and how to determine if the pricing is fair. Among other terms, you need to know whether you are purchasing share sales or asset sales.

With a share sale, the purchaser takes all of the assets and liabilities on. This means that a faux pas made by the company in the past could become your problem as the purchaser, if it results in legal action being taken. Proceeding by way of share sale also requires a thorough and diligent investigation as to the company’s history, and an understanding of its debts and existing obligations.

An asset sale, though often more complex than a share sale, allows for the sale of only select assets and/or liabilities. That being said, certain obligations will necessarily be taken on by the buyer (e.g., obligations to unionized employees). By speaking to a business lawyer in Fort McMurray, you will better understand what risks and obligations you will be forced to take on, even in the course of an asset sale.

Call Flett Manning Moore – the Fort McMurray Business Lawyers of Choice

Navigating the legal aspects of buying or starting a business can be complex and can become costly when the proper steps are not taken from the beginning. Call our law firm to speak to a lawyer in Fort McMurray at 709-799-9290. We provide the sound legal advice you need for your business.