The Court of Appeal, after noting that the business never existed, concludes that a person who acts on behalf of a non-existent business incurs personal liability.
Verifying the existence of a company with the appropriate government registers is normally the starting point for any legal agreement.
Thus, a real estate investor signs two contracts with a company, which on the face of it is a duly incorporated company, for the delivery and installation of multiple windows. The company, after fulfilling its contracts and receiving only half of the amounts owed, seeks recourse from the Court as the plaintiff to claim the unpaid amounts.
The investor argues that the company has no legal connection to him "since the contracts were entered into between himself and a company that turned out to be non-existent and, therefore, these contracts are null and void and the investor owes nothing to the company."
The company representative, after proving that he was the sole owner, claims that it is due to his ignorance and lack of knowledge that he did not concern himself with the existence of his company and the maintenance of its business name.
The Court of Appeal*, having determined that the company never existed, concludes that a person acting on behalf of a non-existent company incurs personal liability. The Court declares that both contracts exist and that each party is obligated to fulfill its obligations. Consequently, the investor is ordered to pay the amounts owed to the company.
It's better to do business with a company that has never emerged from nothingness and therefore never existed legally, rather than with a company that has already existed but has since returned to nothingness because it ceased to exist.
*C.A. Montréal 500-09-16282-055, 2007-06-11
