The Bul Sales Act (Ontario) Has Been Repealed!

Authour: Bernie Olanski, BCom, JD
​​Ontario was the last Canadian province to have bulk sales legislation and now it has repealed the aged and obsolete Bulk Sales Act (Ontario).

The Bulk Sales Act has been around for about 100 years (since 1917) and the last substantial amendment to it occurred in 1959. It was intended to protect trade creditors from merchants selling all or substantially all of their stock to third parties out of the ordinary course of business and then leaving trade creditors unpaid and without recourse. The Bulk Sales Act required a purchaser of assets (such as goods, merchandise or fixtures that were sold as part of the business or used in the carrying on of business) in a “sale in bulk” (a sale out of the usual course of business) to comply with its rigid requirements, failing which the entire transaction could be set aside.

Today, creditors rights are protected by improved credit investigations through credit reporting agencies, Personal Property Security Act (Ontario) security, Business Corporations Act (Ontario) oppression remedies and 30 day goods recovery under the Bankruptcy and Insolvency Act (Canada).

With the other protections available, the Bulk Sales Act was widely regarded as obsolete legislation that unnecessarily added time, expense and uncertainty to asset purchase transactions.

It got to the point where, in asset transactions, the purchaser would routinely waive compliance with the Bulk Sales Act and the seller would agree to indemnify the purchaser for any negative effects of such non-compliance. Compliance was impractical as it required an affidavit listing all of the vendor's secured and unsecured trade creditors (and ensuring that payment arrangements had been made with all such creditors) to be filed in court within a very short time after completion of the transaction. Or, even more impractically, the parties could actually go to court to get an order exempting the transaction from the requirements of the Bulk Sales Act.

On March 22, 2017, Bill 27, the Burden Reduction Act, 2017 received Royal Assent and Schedule 3 repealing the Bulk Sales Act is now in force.