Legal Resources

Business Relationships

Partnership Agreements

If you form a partnership, you should clarify your relationship with the other party early in your planning process, by entering into a written partnership agreement. This agreement will set out rules governing the relationship between partners and is essential to the smooth operation of the business.

A basic partnership agreement should include at least the following:

  • the scope of the business of the partnership;
  • the partnership name;
  • responsibilities and contributions expected from each partner;
  • splitting of profits;
  • requirements for the admission of new partners;
  • partner dispute resolution procedure; and
  • dissolution of the partnership.

Good partnership agreements are essential to the success of a business. Consult one of our experienced business lawyers to help prepare and negotiate a partnership agreement that works for all parties involved.

Shareholders' Agreements

A shareholder agreement is a contract which defines the relationship between some or all of the shareholders of a corporation and with the corporation itself. It is in the best interest of those incorporating the business to create a shareholders' agreement at the outset as it is virtually impossible to successfully negotiate such an agreement once tensions and disputes have arisen between shareholders.

Shareholders agreements will vary in detail and complexity, depending on the particular business and shareholders/partners involved. There are a number of rights and obligations of shareholders which can be addressed within a shareholders' agreement. One of the purposes for a shareholders' agreement is to provide a mechanism for sale of the shareholder's interest in the corporation. It should provide a method for calculating the monetary value of each shareholder's interest in the corporation and an opportunity and mechanism for other shareholders to purchase that interest. The agreement should also contain rules or restrictions about the sale of one shareholder's interest to a person or corporation that the other shareholder deems undesirable. Additionally, the agreement can establish the roles and responsibilities of each member and how they will be compensated for their services.

These are just a few examples of the issues which need to be addressed in a shareholders' agreement. Consult one of our experienced corporate lawyers to obtain personalized advice on the structure and content of your shareholders' agreement.

Employer - Employee Relations

There are two aspects to employee relations. The administrative component involves legal and accounting issues such as payroll, working conditions, benefits and workers' compensation and the second being a dedication to employee job satisfaction through efforts to promote a motivated and productive workforce.

In Ontario, the Employment Standards Act, 2000, applies to most employees and employers. This Act covers such issues as hours of work, minimum wage, public holidays, overtime pay, vacation pay, benefit plans, pregnancy and parental leave, termination of employment, severance pay, and general administration. It is essential that you operate your business within this legal framework to protect yourself from claims by employees or investigations and proceedings by the Ministry of Labour.

On matters such as employment termination, it is important to remember that the Employment Standards Act, 2000, only sets the minimum amount of notice an employee may be entitled to before termination or lay-off. The Court has often provided additional compensation to employees, over and above these statutory minimums. You should consult a lawyer before terminating an employee, to get advice on the best way to handle the situation and ensure that you do not create additional problems for your business.


Most businesses are established with the view that they will continue for an indefinite period. In businesses where more than one owner is involved, it is not unusual for some disagreement to eventually arise between owners that cause one or more to leave the business.

In the absence of an agreement that sets out rules for how to proceed in the event of a dispute among business owners, they should attempt to amicably resolve any dispute themselves. If this is not possible, dispute resolution methods such as mediation or arbitration may be utilized. Should alternative dispute resolution methods not be suitable or effective, parties may resort to have the matter resolved by the court.

There are various situations where using the courts may become necessary. For example, if shareholders with a minority of the shares believe the corporation is being mismanaged, they can start an action on behalf of the corporation to resolve the issue. Another example would be where the corporation's creditors are not being paid and the creditors submit a bankruptcy application to the Court for an order declaring the corporation bankrupt. If the order is granted, the assets of the corporation are transferred to an appointed Trustee in Bankruptcy to be liquidated and divided amongst outstanding creditors, with the remainder to be distributed to the shareholders.

If you are having a dispute with a business associate, consult one of our experienced corporate lawyers to get advice as to how to best proceed.