Anonymised, illustrative composite. An Ontario asset purchase, a completion-accounts price adjustment, and the one mechanic in this hub where the buyer is right about the number and still loses.
At a glance
A buyer acquired the operating assets of an Ontario logistics company on a completion-accounts basis: the price adjusted, after closing, to the actual net working capital in a closing statement the seller was required to deliver within 60 days. The asset purchase agreement gave the buyer 45 days from delivery to object in writing, with a defined dispute-resolution procedure for any objection raised in time. The clause that mattered most turned out to be the one nobody negotiated hard: “if the Buyer does not deliver a Notice of Objection within the Objection Period, the Closing Statement shall be final and binding on the parties for all purposes.”
The seller delivered the closing statement on time. The buyer's controller, mid-integration and short-staffed, filed it for review and did not get to a full reconciliation until seven weeks later — two calendar days after the 45-day window had closed. The reconciliation found a real problem: an accrued vacation-pay liability of $190,000 that should have reduced the seller's net working capital figure, and did not appear on the statement at all. The seller did not dispute the number once it was raised. It disputed the buyer's right to raise it.
$190,000 against a $6,100,000 purchase price — a 3.1% swing in a working-capital adjustment that, had it been caught in time, would have been a straightforward dollar-for-dollar deduction under the agreement's own mechanics. Missed by two days, it became a number the agreement's price-adjustment machinery could no longer touch at all.
The buyer's first argument was that the clause was unenforceable as an improper attempt to contract out of Ontario's Limitations Act, 2002, which sets a basic limitation period of two years: “unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.” On that reading, a 45-day contractual deadline that time-barred a real, quantifiable error looked like exactly the kind of unfair contractual shortcut the Act exists to prevent.
The Act says the opposite. Section 22(1) does make a limitation period under the Act apply “despite any agreement to vary or exclude it” — but only “subject only to the exceptions in subsections (2) to (6),” and subsection (5) is the exception that decides this file: “the following exceptions apply only in respect of business agreements: 1. A limitation period under this Act, other than one established by section 15, may be varied or excluded by an agreement made on or after October 19, 2006.” A “business agreement” is defined, in subsection (6), as “an agreement made by parties none of whom is a consumer as defined in the Consumer Protection Act, 2002.” Two commercial parties negotiating an asset purchase, represented by counsel, are precisely the parties this exception exists for.
But the buyer's argument had the wrong target even before reaching that exception. Section 22 governs limitation periods — the time within which a party may commence a court proceeding. The 45-day objection window is not a limitation period at all. It is a contractual condition attached to a specific, defined mechanism: the price-adjustment procedure the parties built to true up the purchase price without going to court. Missing it does not bar the buyer from suing on anything the general law of contract or statute would otherwise let it sue on; it closes the one door the agreement built for adjusting price by agreement rather than by litigation, on the terms the agreement itself set for using that door. The Act's two-year period was never the right question, because nothing in this dispute was ever a proceeding brought under a limitation period the Act governs — the objection window is a private contractual deadline, layered on top of, not displacing, whatever separate cause of action might otherwise exist and whatever period would apply to it.
The closing statement stood as delivered. The buyer's only live path was a separate claim outside the price-adjustment mechanism entirely — a breach-of-representation claim, if the missing accrual also breached a specific financial-statement or no-undisclosed-liabilities representation with its own survival period and its own basket and cap. In this file it did not clear either the disclosed-facts basket or the representation's own knowledge qualifier, so the $190,000 was, in substance, unrecoverable. It was resolved commercially: a modest post-closing goodwill payment from the seller, made without any admission that the objection window had been improperly enforced.
Had the buyer been right that the two-year limitation period overrode the 45-day objection window, every completion-accounts adjustment in Ontario would carry a live, two-year tail regardless of what the parties negotiated — defeating the entire commercial point of a fixed, short objection period, which exists precisely so a seller can close its books on a deal and stop reserving against it. Section 22(5) is the reason that outcome does not follow: it is Ontario's own legislature confirming that two sophisticated businesses are free to set a shorter, harder deadline than the Act's own default, and courts do not need to rescue a party from a deadline the statute expressly lets it agree to.
The tell was procedural, not legal: nobody on the buyer's side calendared the objection deadline as a hard date the way they calendared closing itself. A 45-day window that runs from a delivery date the seller controls needs its own tracked deadline the moment the closing statement lands — not a general expectation that “the lawyers will flag it.” The clause did exactly what it was drafted to do; the miss was entirely operational.
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