Shakespeare wrote “What’s in a name? That which we call a rose by any other name would smell just as sweet.” The intent of this line in Romeo and Juliet is to convey that naming things is just a convention and that names have no relevance.
Well, contract law would beg to differ.
The legal name on contracts is the registered, official name of the companies taking part in the agreement. It is important to make sure that we use the correct, legal names of each party when creating a contract. While naming the correct parties to a contract may seem straightforward, the potential for errors is there.
It is important to determine who it is you intend to contract with. When contracting with an individual who owns a company, you should be certain as to whether you are contracting with the individual, the company or both. Each of these three options has legal implications.
Ensuring the parties are named correctly is another area to keep in mind. Companies often do business under names different from the legal name.
Every business corporation must have a distinct name that legally identifies the corporation. This name is set out in the articles of incorporation. The corporate name is the legal name and must be used in all contracts.
The corporate name differs from the business name which is what a company may be known as. When choosing a corporate name, entities must ensure the name is distinctive and that it does not cause confusion with other names or trademarks. It can be a numbered company or a word name but either way, Corporations Canada reviews all proposed names to confirm they comply with regulations.
While it seems like a simple process to issue a purchase order to the lowest acceptable bidder once approval for the award has been obtained, we must do our due diligence. We must make sure the name on the bid is the company’s legal name. For example, if a bidder’s business name is ABC Painting and they submit a bid, but their corporate name is 123456 Ontario Inc. operating as ABC Painting, both names or at a minimum the corporate name should appear on the bid and subsequently on the contract. If the correct party isn’t named, then we can lose any recourse should they not meet contractual obligations.
A Corporation Number is assigned by Corporations Canada at the time a company is incorporated and is used in any legal interactions. This differs from the Business Number which is assigned by the Canada Revenue Agency. This 9-digit number is the same as the GST/HST number, which would have the suffix RT001 attached to it.
The corporate name is the legal name. All certificates of insurance and WSIB clearance certificates must be under the corporate name and if certificates are submitted showing something different, this must be questioned and corrected.
All RFX documents should ensure that Bidders bid under their corporate and legal name and that their HST numbers are included. All agencies should complete a corporate search before adding a new vendor to any ERP system and an audit of their existing vendor master to ensure that the HST numbers are attached to the correct vendors.
Another opportunity to ensure proper records are maintained is when a vendor notifies an agency of a name change during the contract term. Should this occur, more information should be obtained. The reason for the name change is important as mergers, amalgamations, assignments, or simple name changes would be treated differently.
In the event of a corporate merger or amalgamation, for example, two or more corporations may combine and continue as one corporation that retains all the assets and liabilities of the amalgamating corporations. In this case, an official vendor name change must be recorded, and copies of the following documents obtained:
- Articles of incorporation,
- Canada Revenue Agency Registration documentation,
- Sample invoice,
- Revised WSIB and certificates of insurance, as well as
- Revised securities/sureties if applicable.
The finance department may also require updated banking information if an electronic fund transfer has previously been set up for payment.
In the event of a simple business name change, the above documentation may not be required.
In conclusion, names do have relevance. A company may be known by one or more names, but it is so important that we contract with the correct one. Due diligence is the only way to ensure contracts are issued correctly.