Many companies do business under a shortened version of their
name or a separate business or trade name, without also setting out
their full legal name. Recent British Columbia cases have
confirmed the importance of using a company's full legal name
in contracts, invoices, purchase orders and other business
documents. Failing to do so can result in the individual
representing the company being found personally liable for the
company's obligations. It can also trigger personal
liability of the company's directors under the BC Business
In a February 2015 BC Supreme Court case (269893 Alberta
Ltd. v. Petersen 2015 BCSC 184), a landlord tried to hold the
individual owner of the tenant company liable for obligations under
the lease. There was no signed lease, but the landlord
pointed to a Letter of Intent that referred in various places to
the individual principal, to the trade name "Otter Bay
Marina", and to the numbered company. The court cited
the 2013 BC Court of Appeal case Pageant Media v. Piche,
2013 BCCA 537 as authority that a person who signs as agent for a
limited liability company has the onus to advise the third party of
this fact, or runs the risk of being held personally liable.
In this case, the court found that the owner of the tenant, by
signing the Letter of Intent as "David Bromley, President
269893 Alberta Ltd.", gave sufficient notice to the landlord
that he was contracting in the name of the numbered company.
He was not held personally liable.
The signor was not so fortunate in a 2014 decision of the BC
Provincial Court (Out West Windows Glass Home Maintenance Ltd.
v. Tilley, 2014 BCPC 296). In that case, a homeowner
claimed against a contractor for defective work on a home.
The purchase order prepared by the contractor named the contracting
entity as "Out West Windows, Glass & Home
Maintenance". No reference was made to the full legal
name "Out West Windows Glass Home Maintenance Ltd."
The court found that the homeowner had not been told that he would
be contracting with a limited company. Section 27
of the BC Business Corporations Act requires each company
doing business in BC to display its full name (including the
"legal" component, which in this case was
"Ltd.") on all contracts and certain other business
papers and notices. The purchase order was consistent only
with the inference that the principal, Mr. Hargrave, was doing
business as a sole proprietorship under the business name "Out
West Windows, Glass & Home Maintenance". In those
circumstances, the court found that Mr. Hargrave could not shelter
behind the limited liability of his company, and found him
personally liable for damages.
Whether or not they sign contracts intended to be in the name of
the company, directors and officers who knowingly permit a BC
company or extraprovincial company to fail to state its full legal
name may be personally liable to indemnify a purchaser of goods or
services from the company who suffers loss or damage as a result of
being misled thereby (BC Business Corporations Act ss
158(1) and 384(1)). Liability under these sections does not,
however, appear to have been applied in recent years.
Note that the registration of a trademark (federally) or a
business name (provincially) as owned by a company may be found to
give the third party notice of the fact that it is dealing with a
limited liability company – this concept was not considered
in the cases reviewed. Whether or not a trademark or business
name is registered, however, s. 27 of the Business Corporations
Act requires the full legal name to be displayed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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