Tag: Canada Business Corporations Act

In many English speaking jurisdictions, the term “shall” is deemed to be somewhat ambiguous for the simple reason that it appears to make reference to discretion rather than obligation. In an attempt to look at its meaning precisely, consider Canadian corporate legislation as set out in the Canada Business Corporations Act which states, “A corporation “shall” set out its name in legible characters in all contracts, invoices, negotiable instruments”.  In law school, aspiring lawyers are overwhelmed with “shalls” in statutes and contracts and as a result, “shall” still remains the word that makes legal instruments obviously clear.

However, in actual fact, one may argue that it indicates quite the contrary. There has been a notable amendment to the Interpretation Acts of at least three Canadian provinces (British Colombia, Alberta and Manitoba) which states that “must”, is to be interpreted as imperative, eliminating any contradiction with the use of  “shalls”. This solution is not commonly acknowledged by other government agencies even though there is insufficient evidence, mainly in the form of case law, to cast doubt on the effectiveness of replacing “shall” with “must” to establish obligation.

This approach may offer more consistency and less vagueness. Legal writing should be precise and, in a ideal world, offer little to no room for dispute. Yet, in corporate contract circumstances, it is common practice to ensure that the obligation of each party is reflected in any agreement, in what should be deemed incontestable. Therefore, the intended consequence must be made ultimately clear to avoid scrutiny. With that being observed, it may be fair to determine that the preferences of legal professionals lean towards the unambiguous “must” – imposing clarity and a legal obligation.

A corporate lawyer is an essential part of your contract review and negotiation process to ensure that any agreement entered into accurately reflects the desired intent.

Contact Elisabeth Colson of Devry Smith Frank LLP for experienced corporate assistance, at elisabeth.colson@devrylaw.ca or at (416) 446-5048.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”