Business Name (Liability)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-24
CLNP Page ID:	2437
Page Categories:	[Contract Law]
Citation:	Business Name (Liability), CLNP 2437, <https://rvt.link/dv>, retrieved on 2024-11-24
Editor:	Sharvey
Last Updated:	2024/11/01

Need Legal Help?
Call (888) 655-1076

Join our ranks and become a Ninja Initiate today

Business Names Act, R.S.O. 1990, c. B.17

2 (1) No corporation shall carry on business or identify itself to the public under a name other than its corporate name unless the name is registered by that corporation. R.S.O. 1990, c. B.17, s. 2 (1).

(2) No individual shall carry on business or identify his or her business to the public under a name other than his or her own name unless the name is registered by that individual. R.S.O. 1990, c. B.17, s. 2 (2).

(3) No persons associated in partnership shall carry on business or identify themselves to the public unless the firm name of the partnership is registered by all of the partners. 1994, c. 27, s. 72 (2).

(3.1) No persons associated in partnership shall carry on business or identify themselves to the public under a name other than a firm name registered under subsection (3) unless the name is registered by all of the partners. 1994, c. 27, s. 72 (2).

...

7 (1) A person carrying on business in contravention of subsection 2 (1), (2) or (3) or subsection 4 (4) or (6) is not capable of maintaining a proceeding in a court in Ontario in connection with that business except with leave of the court. R.S.O. 1990, c. B.17, s. 7 (1).

(2) The court shall grant leave if the person seeking to maintain the proceeding satisfies the court that,

(a) the failure to register was inadvertent;

(b) there is no evidence that the public has been deceived or misled; and

(c) at the time of the application to the court, the person is not in contravention of this Act or the regulations. R.S.O. 1990, c. B.17, s. 7 (2).

(3) No contract is void or voidable by reason only that it was entered into by a person who was in contravention of this Act or the regulations at the time the contract was made. R.S.O. 1990, c. B.17, s. 7 (3).

Business Corporations Act, R.S.O. 1990, c. B.16

10 (1) The word “Limited”, “Limitée”, “Incorporated”, “Incorporée” or “Corporation” or the corresponding abbreviations “Ltd.”, “Ltée”, “Inc.” or “Corp.” shall be part, in addition to any use in a figurative or descriptive sense, of the name of every corporation, but a corporation may be legally designated by either the full or the abbreviated form. R.S.O. 1990, c. B.16, s. 10 (1).

...

(5) Despite subsection (4), a corporation shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the corporation and in all documents sent to the Director under this Act. R.S.O. 1990, c. B.16, s. 10 (5).

...

21 (1) Except as provided in this section, a person who enters into an oral or written contract in the name of or on behalf of a corporation before it comes into existence is personally bound by the contract and is entitled to the benefits thereof. R.S.O. 1990, c. B.16, s. 21 (1).

(2) A corporation may, within a reasonable time after it comes into existence, by any action or conduct signifying its intention to be bound thereby, adopt an oral or written contract made before it came into existence in its name or on its behalf, and upon such adoption,

(a) the corporation is bound by the contract and is entitled to the benefits thereof as if the corporation had been in existence at the date of the contract and had been a party thereto; and

(b) a person who purported to act in the name of or on behalf of the corporation ceases, except as provided in subsection (3), to be bound by or entitled to the benefits of the contract. R.S.O. 1990, c. B.16, s. 21 (2).

(2.1) Until a corporation adopts an oral or written contract made before it came into existence, the person who entered into the contract in the name of or on behalf of the corporation may assign, amend or terminate the contract subject to the terms of the contract. 2011, c. 1, Sched. 2, s. 1 (5).

(3) Except as provided in subsection (4), whether or not an oral or written contract made before the coming into existence of a corporation is adopted by the corporation, a party to the contract may apply to a court for an order fixing obligations under the contract as joint or joint and several or apportioning liability between the corporation and the person who purported to act in the name of or on behalf of the corporation, and, upon such application, the court may make any order it thinks fit. R.S.O. 1990, c. B.16, s. 21 (3).

(4) If expressly so provided in the oral or written contract referred to in subsection (1), a person who purported to act in the name of or on behalf of the corporation before it came into existence is not in any event bound by the contract or entitled to the benefits thereof. R.S.O. 1990, c. B.16, s. 21 (4).

Christian Chijindu and Nkiruka Ochei v.2153801 Ontario c.o.b. The Loen Group, Shawn Paul Walker & Kevin Tetley, 2017 ONSC 638 (CanLII)

[6] The appellants argue that they entered into a contract with The Loen Group. They submit they were not aware that 2153801 Ontario Ltd. was a party to the contract and that the agreement is unambiguous on that point. At paragraph 18 of the Reasons, the trial judge accepted the evidence of Walker, the principal of the numbered company and The Loen Group.

[7] In paragraph 34 the trial judge finds, and I quote: “I have no doubt that Shawn Walker clearly identified The Loen Group as a company owned and operated by him and Kevin Tetley.” In that same paragraph the trial judge finds that the appellants knew the numbered company and The Loen Group were one and the same. The Loen Group was the business trade name registered by the numbered company.

[8] While s.10(5) of the Business Corporations Act, R.S.O. [1990] c.B. 16 stipulates a corporation must set out its name in all contracts and invoices issued or made by and or on behalf of the corporation so that members of the public know who they are dealing with, s.7(3) of the Business Names Act, R.S.O. [1990] c.B. 17 states: “No contract is void or voidable by reason only that it was entered into by a person who was in contravention of this Act or the regulations at the time the contract was made.”

[9] In addressing a party’s failure to comply with these legislative provisions, “A Court will consider whether the contracting party’s failure to include its corporate name on the contract misled the other party in any way or cause him to take steps he would not otherwise have taken.” See; Chandaria Estates v. Stewart, [2011] ONSC 2486. As argued by the respondents and found by the trial judge, the appellants knew or ought to have known that The Loen Group operated as the numbered company. The trial judge therefore found that the appellants were not misled or prejudiced by the fact that 2153801 is not specifically referred to in the agreement.

...

[14] Following the findings of fact by the trial judge, the appellants knew that the corporation was the contracting party, and therefore the proper lien holder and only it is liable on the contract.

[15] For these reasons, we find no palpable or overriding error in the decision.

[16] Accordingly the appeal is dismissed.

Hurley Corp. v. Canadian IPG Corp., 2010 ONSC 681 (CanLII)

[26] It is instructive that the prohibition in section 11 (1) of the BCA not only is not backed expressly by the sanction of nullification of contracts, but also is followed by the curative provisions of section 21. The legislature has declared public policy to be in favour of validating contracts entered into on behalf of a corporation not yet in existence. The same is true of contracts entered into in violation of section 2 of the Business Names Act, by virtue of section 7 of that act. That being so, it would be logical for public policy to favour the validity of contracts entered into by an existing corporation using a name it did not yet have, was in the process of obtaining and ultimately did obtain.