EQUIPMENT TRANSACTIONS - Purchase, Sale, Lease, Financing
Pre-Acquisition - Letter of Intent - Due Diligence - Share Purchase / Sale - Asset Purchase / Sale - Merger - Equipment
Contact Neufeld Legal for business mergers and acquisitions at 403-400-4092 or Chris@NeufeldLegal.com
The legal framework governing equipment transactions, being the purchase, sale, and leasing of tangible, movable assets used in business operations, is primarily dictated by provincial law, pursuant to the applicable Personal Property Security Act (PPSA), and the contractual arrangements between the parties. The PPSA's broad scope is critical, as it applies not only to transactions explicitly structured as security interests (like chattel mortgages) but also to transactions that in substance secure an obligation, regardless of their form. Crucially, this means that most commercial equipment leases exceeding a term of one year are treated as security interests under the PPSA, compelling lessors, financiers, and vendors to register their interests to protect their rights against third parties, such as a debtor's other creditors or a trustee in bankruptcy.
Central to ensuring the enforceability of any interest in commercial equipment is the requirement of perfection. Perfection is the process by which a secured party makes their interest known publicly, typically by registering a financing statement in the relevant provincial PPSA registry, usually based on the debtor's location. Without timely and accurate registration, a security interest is deemed unperfected and will be subordinate to many other claims, including those of unsecured creditors who seize the asset or a receiver who takes possession of the debtor's assets. A key mechanism that financiers and vendors often rely upon is the Purchase Money Security Interest (PMSI), which grants a super-priority status over earlier registered security interests, provided the registration is completed within a strict, short statutory window (often 10 or 15 days) after the debtor takes possession of the equipment.
Beyond secured financing and priority, equipment transactions are governed by underlying principles of contract law, particularly regarding offer, acceptance, warranties, and remedies for breach. Other pertinent provincial legislation may also impose implied conditions and warranties, such as fitness for purpose and merchantable quality, which often apply to equipment sales but are frequently modified or excluded in commercial contracts. Finally, specialized or high-value mobile equipment, such as aircraft or rail vehicles, often requires adherence to both federal legislation and international conventions, notably the Cape Town Convention and its relevant protocols, which establish a global registry for interests in such assets. Therefore, legal due diligence must span contractual enforceability, priority under the PPSA, and compliance with all operational regulatory standards.
When it comes to the legal component of corporate mergers & acquisitions, that is when our law firm comes into play. Such that when your business is seeking knowledgeable and experienced legal representation in orchestrating and completing business mergers, acquisitions and divestitures, we are capable of providing such strategic legal advice and direction. Contact our law firm at Chris@NeufeldLegal.com or 403-400-4092 to schedule a confidential initial consultation for advancing your business' transactional objectives.