Business & Corporate
When COVID Met MAE in the Ordinary Course of Business: Canadian and US Courts Take Different Approaches
Since the outbreak of the COVID-19 pandemic, there has been a wave of cases in Canada and the United States where buyers have sought to walk away from an acquisition. In justifying their decision not to close, buyers have invoked material adverse effect (“MAE”) clauses and covenants to carry on business in the ordinary course. The recent decision of the Ontario Superior Court of Justice in Fairstone Financial Holdings Inc. v. Duo Bank of Canada has established an important Canadian precedent for the interpretation of these commonly-found provisions in M&A transaction agreements.