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Acquisition of shares and loss of money invested: a badly written contract
hurts.

If you decide to invest in a company by acquiring shares, it is important
that you bring particular attention to the drafting of the sale contract,
unless you do not mind losing your investment.

In a case decided by the Quebec Superior court, a businessman had approached
another we will call Joseph, who was the only shareholder of a company, to
buy 75% of his shares in this company for 75 000$.

Following negotiations, both men signed a contract written by the buyer, the
drafting of which was so poor we will only mention that the contract seemed
to specify that the 75 000$ would be paid to the company (not to Joseph) in
two installments, a first of 40 000$ and a second of 35 000$, with the
acquired shares to be transferred upon the first payment.

Four days after the signing of the contract, without the shares being
transferred, the buyer emitted a check of 40 000$ to the company's order,
which Joseph deposited in the company's bank account. Subsequently, for
different reasons, the transaction was not completed, the share transfer was
not executed and Joseph terminated the company's activities by liquidating
its assets.

In reaction, the buyer sued Joseph to obtain reimbursement of his 40 000$
investment.

At the trial, the parties submitted contradictory arguments as to the
contract's meaning and as to their respective obligations, regarding which
the judge mentioned that the contract was so badly written that it was very
difficult, in reading it, to sustain one argument or the other:
  "This contract, filed as exhibit P-1, should be used as an example by the
Quebec Bar Association in its regular promotional campaigns before the
public to encourage people to consult an attorney. At the very least, this
document, even after having been read twice, three times or even four times,
brings little light as to the parties' intentions."
The court therefore dismissed the buyers action against Joseph, since the 40
000$ had been paid to the company and not to Joseph personally, since
nothing showed that this money had been utilized by Joseph rather than by
the company and since there was no evidence to the effect that Joseph had
personally obliged himself to reimburse the 40 000$ invested if the
transaction was not finalized. The court also mentioned that things may have
been different if the company had been sued.

This means that in these types of transactions, a buyer is certainly well
advised to retain the services of a professional to assure that the sale
contract is set up correctly and that all required dispositions are taken to
protect the buyer's interests in light of pertinent circumstances.

[Posting date in the "What's up?" section: 06/03/01. Court file number:
410-05-000230-938. Judgment date: 03/10/00]

Beaulieu Normandeau, attorneys
Place Iberville III
2960, boulevard Laurier, suite 40
Sainte-Foy (QC) G1V 4S1
Canada
Tel: (418) 652-1868
Fax: (418) 657-6728
Web site: www.beaulieunormandeau.com
e-mail: attorney@beaulieunormandeau.com
____________________________________________

Operating out of the Quebec City suburb of Sainte-Foy in Canada, Beaulieu
Normandeau represents individuals and small, medium and large companies and
corporations by offering them practical and judicious strategies and
solutions in view of maintaining and facilitating their growth.
Our web site's main purpose is to share legal information with our clients
and the general public in a practical, dynamic and user-friendly manner. Its
main section, "What's up?", is updated every Monday and contains a brief
summary of our selection of recent judgments or of legal principles relating
to the business world that we deem important for people residing in Quebec
or who have interests here, and who wish to have a better understanding of
the workings of our legal system. This section also allows visitors to our
site to subscribe to our free e-mail service to automatically receive our
weekly articles on business law.

Please note that the legal developments summarized above are shared as
general information only, do not constitute a full analysis or a legal
opinion on our part and do not establish a solicitor-client relationship.
Although our summaries take into account applying law at the moment of their
posting here and usually rely on a recent jurisprudential basis, and
although we do our utmost to post up-to-date information, the law discussed
here may be modified or may have been modified and the facts of the case are
not necessarily the same as those that may concern you. Be prudent and
consult an attorney before taking an important decision!

Any court file numbers and judgments referred to above truly exist. As to
judgments, the vast majority are subject to a delay between the date at
which they are rendered and the date at which they are available in
electronic databases. Finally, as to the identity of parties to a litigation
process, although such information is part of the public domain, our policy
is to refrain from posting it.

We thank you for your attention.


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<DIV align=3Dleft><FONT face=3DArial size=3D2>
<DIV align=3Dleft><FONT face=3DArial color=3D#400000 =
size=3D2><STRONG>Acquisition of=20
shares and loss of money invested: a badly written contract=20
hurts.</STRONG></FONT></DIV>
<DIV><FONT size=3D2></FONT>&nbsp;</DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D2>If you decide to invest in =
a company by=20
acquiring shares, it is important that you bring particular attention to =
the=20
drafting of the sale contract, unless you do not mind losing your=20
investment.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D2>In a case decided by the =
Quebec Superior=20
court, a businessman had approached another we will call Joseph, who was =
the=20
only shareholder of a company, to buy 75% of his shares in this company =
for 75=20
000$.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D2>Following negotiations, =
both men signed=20
a contract written by the buyer, the drafting of which was so poor we =
will only=20
mention that the contract seemed to specify that the 75 000$ would be =
paid to=20
the company (not to Joseph) in two installments, a first of 40 000$ and =
a second=20
of 35 000$, with the acquired shares to be transferred upon the first=20
payment.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D2>Four days after the =
signing of the=20
contract, without the shares being transferred, the buyer emitted a =
check of 40=20
000$ to the company's order, which Joseph deposited in the company's =
bank=20
account. Subsequently, for different reasons, the transaction was not =
completed,=20
the share transfer was not executed and Joseph terminated the company's=20
activities by liquidating its assets.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D2>In reaction, the buyer =
sued Joseph to=20
obtain reimbursement of his 40 000$ investment.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D2>At the trial, the parties =
submitted=20
contradictory arguments as to the contract's meaning and as to their =
respective=20
obligations, regarding which the judge mentioned that the contract was =
so badly=20
written that it was very difficult, in reading it, to sustain one =
argument or=20
the other:</FONT></DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
  <DIV><FONT face=3DArial size=3D2>"This contract, filed as exhibit P-1, =
should be=20
  used as an example by the Quebec Bar Association in its regular =
promotional=20
  campaigns before the public to encourage people to consult an =
attorney. At the=20
  very least, this document, even after having been read twice, three =
times or=20
  even four times, brings little light as to the parties'=20
  intentions."</FONT></DIV></BLOCKQUOTE>
<DIV><FONT face=3DArial size=3D2>The court therefore dismissed the =
buyers action=20
against Joseph, since the 40 000$ had been paid to the company and not =
to Joseph=20
personally, since nothing showed that this money had been utilized by =
Joseph=20
rather than by the company and since there was no evidence to the effect =
that=20
Joseph had personally obliged himself to reimburse the 40 000$ invested =
if the=20
transaction was not finalized. The court also mentioned that things may =
have=20
been different if the company had been sued.</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D2>This means that in these =
types of=20
transactions, a buyer is certainly well advised to retain the services =
of a=20
professional to assure that the sale contract is set up correctly and =
that all=20
required dispositions are taken to protect the buyer's interests in =
light of=20
pertinent circumstances.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D1>[Posting date in the =
"What's up?"=20
section: 06/03/01. Court file number: 410-05-000230-938. Judgment date:=20
03/10/00]</FONT></DIV><FONT face=3DArial size=3D1></FONT></FONT></DIV>
<DIV><FONT face=3DArial size=3D2><FONT face=3DArial =
size=3D1></FONT></FONT>&nbsp;</DIV>
<DIV><FONT size=3D2><FONT size=3D2><FONT face=3DArial>Beaulieu =
Normandeau,=20
attorneys<BR>Place Iberville III<BR>2960, boulevard Laurier, suite=20
40<BR>Sainte-Foy (QC) G1V 4S1<BR>Canada<BR>Tel: (418) 652-1868<BR>Fax: =
(418)=20
657-6728<BR>Web site: </FONT><A =
href=3D"http://www.beaulieunormandeau.com"><FONT=20
face=3DArial =
color=3D#0000ff>www.beaulieunormandeau.com</FONT></A><BR><FONT=20
face=3DArial>e-mail<FONT color=3D#0000ff>: </FONT></FONT><A=20
href=3D"mailto:attorney@beaulieunormandeau.com"><FONT face=3DArial=20
color=3D#0000ff>attorney@beaulieunormandeau.com</FONT></A><FONT=20
color=3D#0000ff><BR></FONT><FONT=20
face=3DArial>____________________________________________</FONT></FONT></=
FONT></DIV>
<DIV align=3Dleft><FONT size=3D2><FONT size=3D2><FONT=20
face=3DArial></FONT></FONT></FONT>&nbsp;</DIV>
<DIV align=3Dleft><FONT size=3D2><FONT size=3D2><FONT size=3D1><FONT=20
face=3DArial>Operating out of the Quebec City suburb of Sainte-Foy in =
Canada,=20
Beaulieu Normandeau represents individuals and small, medium and large =
companies=20
and corporations by offering them practical and judicious strategies and =

solutions in view of maintaining and facilitating their =
growth.</FONT></DIV>
<P align=3Dleft><FONT face=3DArial>Our web site's main purpose is to =
share legal=20
information with our clients and the general public in a practical, =
dynamic and=20
user-friendly manner. Its main section, "<A=20
href=3D"http://www.beaulieunormandeau.com/new.htm"><FONT =
color=3D#000080><FONT=20
color=3D#0000ff>What's up?</FONT></FONT></A>", is updated every Monday =
and=20
contains a brief summary of our selection of recent judgments or of =
legal=20
principles relating to the business world that we deem important for =
people=20
residing in Quebec or who have interests here, and who wish to have a =
better=20
understanding of the workings of our legal system. This section also =
allows=20
visitors to our site to subscribe to our free e-mail service to =
automatically=20
receive our weekly articles on business law.</FONT></P>
<P align=3Dleft><FONT face=3DArial>Please note that the legal =
developments=20
summarized above are shared as general information only, do not =
constitute a=20
full analysis or a legal opinion on our part and do not establish a=20
solicitor-client relationship. Although our summaries take into account =
applying=20
law at the moment of their posting here and usually rely on a recent=20
jurisprudential basis, and although we do our utmost to post up-to-date=20
information, the law discussed here may be modified or may have been =
modified=20
and the facts of the case are not necessarily the same as those that may =
concern=20
you. Be prudent and consult an attorney before taking an important=20
decision!</FONT></P>
<P align=3Dleft><FONT face=3DArial>Any court file numbers and judgments =
referred to=20
above truly exist. As to judgments, the vast majority are subject to a =
delay=20
between the date at which they are rendered and the date at which they =
are=20
available in electronic databases. Finally, as to the identity of =
parties to a=20
litigation process, although such information is part of the public =
domain, our=20
policy is to refrain from posting it.</FONT></P>
<P align=3Dleft><FONT face=3DArial>We thank you for your=20
attention.</FONT></FONT></FONT></FONT></P></BODY></HTML>

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