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Expert: Alison R. Manzer
My dad has a business where he had an accountant draft up an agreement to divide shares, if they did not get a lawyer to bind the contract is it still able to hold up in court?
Alison R. Manzer answered:
A lawyer is not needed to create a proper binding contract at any time. There are a very few exceptions where a notary needs to witness the contract for it to have effect but this is not the case for a shareholder agreement.
A contract can be formed in a number of ways, including by conduct, oral agreement and written agreement. There are some conditions that need to be met to create the contract. These are fairly simple legal concepts but must exist in the legal sense. The presence or absence of a lawyer does not create these conditions; a lawyer can however ensure they are present. The contract must have "offer" and "acceptance" and must be entered into for mutual valuable consideration. The terms of the contract must be sufficiently clear that they can be identified and it must be clear that both parties understood the terms and intended the result of the contract.
The involvement of a lawyer in documenting agreements is recommended to ensure that the contract is properly formed, all of the relevant issues are properly considered and the provisions are clear for later legal interpretation. A lawyer does not need to witness or certify a contract for it to be effective.
About the author
Alison R. Manzer works for Cassels Brock & Blackwell LLP.