Anonymised, illustrative composite. A change-of-control consent condition ran past the negotiated outside date on an Alberta share purchase, and the real dispute was not whether the condition was met — it was whether either side could still invoke the outside date at all.
At a glance
A private buyer agreed to acquire 100% of the shares of an Alberta oilfield-services company for $14,600,000. The target's single largest customer, representing 42% of trailing revenue, held a master services agreement with a standard anti-assignment clause: a change of control in the target required the customer's written consent or the customer could treat the contract as terminated. The purchase agreement made that consent a condition of closing, gave the buyer a covenant to use commercially reasonable efforts to obtain it, gave the seller a reciprocal covenant to reasonably cooperate — including making appropriate personnel available — and set an outside date 90 days after signing, after which either party could walk away if the condition remained unmet.
The customer's internal approval process needed two rounds of follow-up information from the target before it would sign off. For the first 68 days, the target's VP Sales — who had run the relationship for six years — answered every request within a day or two. On Day 81, the seller received an unsolicited indicative offer from a third party at $16,100,000. Starting Day 79 and continuing through Day 90, the same VP Sales stopped returning the customer's calls and did not forward two follow-up information requests the customer's own procurement lead later confirmed, by email, that it needed to finish its internal sign-off.
On Day 90, the seller served a notice purporting to terminate the agreement, citing the unmet consent condition and asserting that the buyer's efforts had fallen short of the commercially reasonable standard. The buyer refused to treat the termination as effective and produced the customer's email chain showing where the delay had actually come from.
Deal value $14,600,000. Competing indicative offer $16,100,000, received Day 81. Buyer's committed acquisition financing — a $10,200,000 term facility — was rate-locked only through the original outside date. Had the termination stood, a fresh commitment at then-current pricing would have added roughly 140 basis points, or about $850,000 over the facility's term.
No statute sets an efforts standard for a closing-condition covenant, and no statute decides whether a party who contributed to a condition's non-fulfilment may still invoke it. Two settled lines of Canadian common law fill that space, and this file turns on both together. On the efforts standard itself, the Ontario Court of Appeal's leading decision on the point, 364511 Ontario Ltd. v. Darena Holdings Ltd. (1999), 120 O.A.C. 280 (C.A.), upheld a finding that a party had met a reasonable commercial efforts covenant on the facts before it — the standard is assessed by looking at what a party actually did, not at the label the covenant carries, and it sits below best efforts and above a bare reasonable efforts standard.
Read the unit. The termination right and the efforts covenant are not two separate questions; they have to be read together. A party generally cannot rely on the non-fulfilment of a condition to escape a contract where its own conduct caused or materially contributed to that non-fulfilment. The Supreme Court of Canada's recognition of a general organizing principle of good faith in contract law, and the duty of honest performance that flows from it, in Bhasin v. Hrynew, 2014 SCC 71, is the modern doctrinal home for that principle: a party performing a contract may not knowingly mislead the other side about matters directly linked to that performance. On this file, the email chain placed the delay squarely inside the 11-day window when the seller's own relationship owner went silent — silence that, combined with serving a termination notice built on the resulting gap, is exactly the kind of conduct both lines of authority are aimed at.
A third statutory candidate was checked and ruled out. The Courts of Justice Act (Ontario) s.98 lets a court grant relief against penalties and forfeitures — real authority, used elsewhere in this corpus for a forfeited deposit — but it answers a different question: whether a party should be relieved from losing an interest or right it already had. Nothing was forfeited here. The deal simply did not close on the original date; each side kept what it already held. Section 98 has no application where there is no forfeiture to relieve against.
Seller's counsel, on reviewing the customer's email chain, advised that a termination on Day 90 was unlikely to be upheld given how squarely the delay traced back to the seller's own VP Sales. The competing $16,100,000 offer collapsed on its own terms days later, once that bidder's directors balked at a 150-day financing condition. The buyer obtained consent on Day 94 by going directly to the customer's CFO. Rather than litigate whether the Day-90 notice had been effective, the parties signed a short amendment extending the outside date to Day 100 and closed four days after the original deadline on the original terms.
If the termination had stood, the buyer would have lost both the deal and its rate-lock on the $10,200,000 facility, facing roughly $850,000 in additional financing cost over the facility's term for a replacement commitment — with no assurance of matching a seller now negotiating from a $16,100,000 competing offer.
The tell was in the timing, not the silence itself. A relationship owner going quiet for a stretch happens on real deals for ordinary reasons. What made this stretch different is that it began two days after a materially higher competing offer arrived and ended only once the outside date had already passed — a pattern that reads very differently from an isolated lapse.
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