Know your renter

When providing rentals, it is always important to know to whom you are renting. There exist many examples of situations where the company renting the goods did not realize with whom its was doing business.

Take for example, Smith Lawn Care. Is the company registered as a corporation? Or is it an individual conducting business under an unregistered name?

It is important to know with whom you are conducting business because, should a problem arise, you will need to know with whom you are dealing and against whom your actions should be taken. If the “company” is not incorporated you will have to deal with the individual person carrying on the business, whereas if it is an incorporated company you will deal with the company as its own entity. What if you thought you were dealing with a company but actually your contract was with a person who has gone bankrupt on several occasions?

One of the many reasons people carry on business as a corporation is so they will not be personally liable with respect to the transactions taken by the corporation, because the corporation is its own entity. This means the property of the corporation is its own property, and does not belong to its shareholders.

So how do you know if the company with whom you are dealing  is incorporated?

All companies who are incorporated will have the word Limited, Incorporated, Corporation or the abbreviation Ltd., Inc. or Corp. as part of their legal names. The corporation may carry on business or identify itself by a different name than its corporate name; however, it usually will set out its corporate name in legible characters on all contracts, invoices, negotiable instruments and any orders for goods or services. In order to be certain, conduct a search in your provincial corporations branch or contact a lawyer in your jurisdiction to assist you in determining whom exactly you are dealing with. Industry Canada provides a listing of provincial corporate registrars at www.ic.gc.ca. Once you are at the Industry Canada homepage, go to Business Tools and Resources > Corporations Canada > General Information. There are links to the provincial registrar web pages there, and many of them have search functions where you can see if a particular company is licensed in your province. These lists are only helpful in cases of incorporated businesses, of course. For private companies, you can check to see if their HST numbers are legitimate at www.cra-arc.ga.ca > Online services and other e-services > For business.

When doing business it is always good practice to identify exactly your clients. That way, you can assess your risks better and know how much credit to potentially afford them. Unless you know with whom you are dealing, you will be unable to properly assess the business risk you are undertaking in renting your property and extending credit.

Deryk Coward articled with D’Arcy & Deacon in 1996 and was called to the Manitoba bar in June of 1997. He is a partner with the firm, practising primarily in the area of general civil litigation, personal injury, insurance, debtor-creditor and labour and employment law. Coward is legal counsel for the Canadian Rental Association.