What constitutes a “cross-border supply agreement” under the CBCA?
Under the Canada Business Corporations Act, a cross-border supply agreement is any written contract between a non-resident supplier and a Canadian buyer for the provision of goods or services that involves the movement of goods or performance of services across a provincial or international border. The agreement must include a governing law clause specifying Canadian federal or provincial law, and the supplier must designate a representative for service of process within Canada. Failure to do so can render the contract unenforceable in Canadian courts.
How are “inter-provincial trade” and “intra-provincial trade” distinguished in your contract framework?
Our framework treats inter-provincial trade as any commercial transaction where goods or services cross a provincial boundary, triggering the Canadian Free Trade Agreement (CFTA) and potentially the Agreement on Internal Trade (AIT). Intra-provincial trade, by contrast, occurs entirely within one province and is governed solely by that province’s commercial laws. For B2B supply agreements, we always classify the transaction based on the physical or digital delivery point, not the parties’ head offices. This classification determines which procurement exemptions, labour mobility rules, and regulatory reconciliation provisions apply.
What does “conformity with the CBCA” mean for a foreign supplier?
Conformity with the Canada Business Corporations Act means the foreign supplier must comply with Part XIX (Non-Resident Corporations) of the CBCA, which requires filing an annual return, maintaining a registered office in Canada, and appointing a director who is either a Canadian resident or a non-resident who has filed a written undertaking to accept service of process. Additionally, the supplier’s contract must include a clause acknowledging the application of the CBCA’s disclosure obligations, including the requirement to provide financial statements if the supplier is a reporting issuer. Our portal reviews each agreement against these specific requirements before execution.
How do you define “force majeure” in the context of Canadian supply chains?
In our contract templates, force majeure is defined as an event beyond the reasonable control of either party that materially prevents performance, including but not limited to: natural disasters, government actions (including border closures or trade sanctions), labour strikes affecting transportation, and public health emergencies. The definition explicitly excludes economic hardship, market fluctuations, and supplier insolvency. Canadian courts have consistently held that force majeure clauses are narrowly construed, so we require the clause to list specific events and include a duty to mitigate. This prevents disputes over whether a pandemic or a port strike qualifies.
What is the “governing law” default for your cross-border agreements?
The default governing law is the law of the province of Ontario, unless the buyer’s principal place of business is in Quebec, in which case the law of Quebec applies. This choice is made to align with the CBCA’s federal framework and the CFTA’s dispute resolution mechanisms. The agreement must also include a forum selection clause designating the courts of the chosen province as the exclusive venue for disputes. We do not permit arbitration clauses that would remove the dispute from Canadian courts, as this can create jurisdictional conflicts under the CBCA. If the supplier insists on arbitration, we recommend the International Commercial Arbitration Act (Canada) with a seat in Toronto.
