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Reverse Purchase Agreement for Canada

Reverse Purchase Agreement Template for Canada

A Canadian-law governed agreement that establishes a structured arrangement where one party sells goods to another party with a binding commitment to repurchase those same goods at a predetermined price and time in the future. The agreement complies with both federal Canadian legislation and applicable provincial laws, particularly regarding sale of goods, security interests, and commercial transactions. It details the initial sale terms, maintenance requirements during the interim period, and specific conditions for the repurchase, including pricing, timing, and quality standards.

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What is a Reverse Purchase Agreement?

The Reverse Purchase Agreement is a specialized commercial contract used when a seller needs to temporarily transfer ownership of goods while maintaining the right and obligation to repurchase them. This arrangement is common in inventory financing, supplier relationships, and temporary capital optimization strategies. The document, governed by Canadian law, must comply with federal legislation such as the Competition Act and provincial sales of goods laws. It typically includes detailed provisions for the initial sale, interim period obligations, and repurchase terms. This type of agreement is particularly useful in situations involving seasonal inventory management, manufacturing supply chains, or when businesses need to improve their working capital position while maintaining long-term access to specific assets.

What sections should be included in a Reverse Purchase Agreement?

1. Parties: Identification of the seller (who will later repurchase) and buyer, including full legal names and addresses

2. Background: Context of the agreement, explaining the initial sale and commitment to repurchase

3. Definitions: Definitions of key terms used throughout the agreement, including 'Goods', 'Purchase Price', 'Repurchase Price', 'Repurchase Date'

4. Initial Sale: Terms and conditions of the initial sale of goods from seller to buyer

5. Purchase Price and Payment: Initial purchase price, payment terms, and method of payment

6. Delivery and Acceptance: Terms for delivery of goods and acceptance criteria

7. Repurchase Obligation: Seller's obligation to repurchase the goods, including timing and conditions

8. Repurchase Price: Price at which goods will be repurchased and payment terms for repurchase

9. Condition of Goods: Requirements for maintaining goods' condition during the interim period

10. Risk and Title: Allocation of risk and responsibility during both transactions

11. Representations and Warranties: Statements of fact and promises by both parties regarding the goods and transaction

12. Default and Remedies: Consequences of failing to meet obligations and available remedies

13. Governing Law: Specification of Canadian law as governing law and jurisdiction

14. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

What sections are optional to include in a Reverse Purchase Agreement?

1. Storage Requirements: Used when specific storage conditions must be maintained between initial sale and repurchase

2. Insurance: Include when specifying insurance requirements during the interim period

3. Security Interest: Used when additional security is required to guarantee the repurchase obligation

4. Third Party Rights: Include when third parties may have rights or obligations related to the goods

5. Export/Import Provisions: Required for cross-border transactions within Canada or international

6. Tax Matters: Include detailed tax provisions when complex tax implications exist

7. Force Majeure: Optional clause for circumstances that may prevent repurchase obligation

8. Confidentiality: Include when transaction involves sensitive commercial information

What schedules should be included in a Reverse Purchase Agreement?

1. Schedule A - Description of Goods: Detailed description and specification of goods subject to the agreement

2. Schedule B - Pricing Schedule: Detailed breakdown of initial purchase price and repurchase price calculations

3. Schedule C - Delivery Schedule: Timing and logistics for initial delivery and subsequent repurchase

4. Schedule D - Condition Requirements: Detailed specifications for acceptable condition of goods at repurchase

5. Schedule E - Storage Requirements: Technical specifications for storage if applicable

6. Appendix 1 - Form of Notice: Standard form for notices related to the repurchase obligation

7. Appendix 2 - Inspection Criteria: Criteria and procedures for inspecting goods at repurchase

8. Appendix 3 - Security Documentation: Forms and details of any security arrangements if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions









































Clauses








































Relevant Industries

Manufacturing

Retail

Wholesale

Automotive

Electronics

Agriculture

Mining

Energy

Financial Services

Commodities Trading

Industrial Equipment

Consumer Goods

Technology

Pharmaceutical

Relevant Teams

Legal

Finance

Procurement

Supply Chain

Operations

Treasury

Risk Management

Commercial

Business Development

Compliance

Asset Management

Relevant Roles

Chief Financial Officer

Commercial Director

Procurement Manager

Supply Chain Manager

Legal Counsel

Contract Manager

Treasury Manager

Operations Director

Risk Manager

Finance Manager

Purchasing Officer

Inventory Manager

Business Development Manager

Commercial Lawyer

Asset Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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