QUEBEC LAW ON CONTRACTS

DIVISION I GENERAL PROVISION

1377. The general rules set out in this chapter apply to all contracts, regardless of their nature. Special rules for certain contracts which complement or depart from these general rules are established under Title Two of this Book.

DIVISION II NATURE AND CERTAIN CLASSES OF CONTRACTS

1378. A contract is an agreement of wills by which one or several persons obligate themselves to one or several other persons to perform a prestation. Contracts may be divided into contracts of adhesion and contracts by mutual agreement, synallagmatic and unilateral contracts, onerous and gratuitous contracts, commutative and aleatory contracts, and contracts of instantaneous performance or of successive performance; they may also be consumer contracts. 1379. A contract of adhesion is a contract in which the essential stipulations were imposed or drawn up by one of the parties, on his behalf or upon his instructions, and were not negotiable. Any contract that is not a contract of adhesion is a contract by mutual agreement. 1380. A contract is synallagmatic, or bilateral, when the parties obligate themselves reciprocally, each to the other, so that the obligation of one party is correlative to the obligation of the other. When one party obligates himself to the other without any obligation on the part of the latter, the contract is unilateral. 1381. A contract is onerous when each party obtains an advantage in return for his obligation. When one party obligates himself to the other for the benefit of the latter without obtaining any advantage in return, the contract is gratuitous. 1382. A contract is commutative when, at the time it is formed, the extent of the obligations of the parties and of the advantages obtained by them in return is certain and determinate. When the extent of the obligations or of the advantages is uncertain, the contract is aleatory. 1383. Where the circumstances do not preclude the performance of the obligations of the parties at one single time, the contract is a contract of instantaneous performance.

Where the circumstances absolutely require that the obligations be performed at several different times or without interruption, the contract is a contract of successive performance. 1384. A consumer contract is a contract whose field of application is delimited by legislation respecting consumer protection whereby one of the parties, being a natural person, the consumer, acquires, leases, borrows or obtains in any other manner, for personal, family or domestic purposes, property or services from the other party, who offers such property and services as part of an enterprise which he carries on.

DIVISION III FORMATION OF CONTRACTS

1. Conditions of formation of contracts

I. General provision 1385. A contract is formed by the sole exchange of consents between persons having capacity to contract, unless, in addition, the law requires a particular form to be respected as a necessary condition of its formation, or unless the parties require the contract to take the form of a solemn agreement. It is also of the essence of a contract that it have a cause and an object. II. Consent

1 Exchange of consents 1386. The exchange of consents is accomplished by the express or tacit manifestation of the will of a person to accept an offer to contract made to him by another person. 1387. A contract is formed when and where acceptance is received by the offeror, regardless of the method of communication used, and even though the parties have agreed to reserve agreement as to secondary terms. 2 Offer and acceptance 1388. An offer to contract is a proposal which contains all the essential elements of the proposed contract and in which the offeror signifies his willingness to be bound if it is accepted. 1389. An offer to contract derives from the person who initiates the contract or the person who determines its content or even, in certain cases, the person who presents the last essential element of the proposed contract. 1390. An offer to contract may be made to a determinate or an indeterminate person, and a term for acceptance may or may not be attached to it.

Where a term is attached, the offer may not be revoked before the term expires; if none is attached, the offer may be revoked at any time before acceptance is received by the offeror. 1391. Where the offeree receives a revocation before the offer, the offer lapses, even though a term is attached to it. 1392. An offer lapses if no acceptance is received by the offeror before the expiry of the specified term or, where no term is specified, before the expiry of a reasonable time; it also lapses in respect of the offeree if he has rejected it. The death or bankruptcy of the offeror or the offeree, whether or not a term is attached to the offer, or the institution of protective supervision in respect of either of them also causes the offer to lapse, if that event occurs before acceptance is received by the offeror. 1393. Acceptance which does not correspond substantially to the offer or which is received by the offeror after the offer has lapsed does not constitute acceptance. It may, however, constitute a new offer. 1394. Silence does not imply acceptance of an offer, subject only to the will of the parties, the law or special circumstances, such as usage or a prior business relationship. 1395. The offer of a reward made to anyone who performs a particular act is deemed to be accepted and is binding on the offeror when the act is performed, even if the person who performs the act does not know of the offer, unless, in cases which admit of it, the offer was previously revoked expressly and adequately by the offeror. 1396. An offer to contract made to a determinate person constitutes a promise to enter into the proposed contract from the moment that the offeree clearly indicates to the offeror that he intends to consider the offer and reply to it within a reasonable time or within the time stated therein. A mere promise is not equivalent to the proposed contract; however, where the beneficiary of the promise accepts the promise or takes up his option, both he and the promisor are bound to enter into the contract, unless the beneficiary decides to enter into the contract immediately. 1397. A contract made in violation of a promise to contract may be set up against the beneficiary of the promise, but without affecting his remedy for damages against the promisor and the person having contracted in bad faith with the promisor. The same rule applies to a contract made in violation of a first refusal agreement. 3 Qualities and defects of consent 1398. Consent may be given only by a person who, at the time of manifesting such consent, either expressly or tacitly, is capable of binding himself. 1399. Consent may be given only in a free and enlightened manner.

It may be vitiated by error, fear or lesion. 1400. Error vitiates consent of the parties or of one of them where it relates to the nature of the contract, the object of the prestation or anything that was essential in determining that consent. An inexcusable error does not constitute a defect of consent. 1401. Error on the part of one party induced by fraud committed by the other party or with his knowledge vitiates consent whenever, but for that error, the party would not have contracted, or would have contracted on different terms. Fraud may result from silence or concealment. 1402. Fear of serious injury to the person or property of one of the parties vitiates consent given by that party where the fear is induced by violence or threats exerted or made by or known to the other party. Apprehended injury may also relate to another person or his property and is appraised according to the circumstances. 1403. Fear induced by the abusive exercise of a right or power or by the threat of such exercise vitiates consent. 1404. Consent to a contract the object of which is to deliver the person making it from fear of serious injury is not vitiated where the other contracting party, although aware of the state of necessity, is acting in good faith. 1405. Except in the cases expressly provided by law, lesion vitiates consent only in respect of minors and persons of full age under protective supervision. 1406. Lesion results from the exploitation of one of the parties by the other, which creates a serious disproportion between the prestations of the parties; the fact that there is a serious disproportion creates a presumption of exploitation. In cases involving a minor or a protected person of full age, lesion may also result from an obligation that is considered to be excessive in view of the patrimonial situation of the person, the advantages he gains from the contract and the general circumstances. 1407. A person whose consent is vitiated has the right to apply for annulment of the contract; in the case of error occasioned by fraud, of fear or of lesion, he may, in addition to annulment, also claim damages or, where he prefers that the contract be maintained, apply for a reduction of his obligation equivalent to the damages he would be justified in claiming. 1408. In the case of a demand for the annulment of a contract on the ground of lesion, the court may maintain the contract where the defendant offers a reduction of his claim or an equitable pecuniary supplement.

III. Capacity to contract 1409. The rules relating to the capacity to contract are laid down principally in the Book on Persons. IV. Cause of contracts 1410. The cause of a contract is the reason that determines each of the parties to enter into the contract. The cause need not be expressed. 1411. A contract whose cause is prohibited by law or contrary to public order is null. V. Object of contracts 1412. The object of a contract is the juridical operation envisaged by the parties at the time of its formation, as it emerges from all the rights and obligations created by the contract. 1413. A contract whose object is prohibited by law or contrary to public order is null. VI. Form of contracts 1414. Where a particular or solemn form is required as a necessary condition of formation of a contract, it shall be observed; it shall also be observed for modifications to the contract, unless they are only accessory stipulations. 1415. A promise to enter into a contract is not subject to the form required for the contract.

2.

Sanction of conditions of formation of contracts

I. Nature of nullity 1416. Any contract which does not meet the necessary conditions of its formation may be annulled. 1417. A contract is absolutely null where the condition of formation sanctioned by its nullity is necessary for the protection of the general interest. 1418. The absolute nullity of a contract may be invoked by any person having a present and actual interest in doing so; it is invoked by the court of its own motion. A contract that is absolutely null may not be confirmed. 1419. A contract is relatively null where the condition of formation sanctioned by its nullity is necessary for the protection of an individual interest, such as where the consent of the parties or of one of them is vitiated. 1420. The relative nullity of a contract may be invoked only by the person in whose interest it is established or by the other contracting party, provided he is acting in good faith and sustains serious injury therefrom; it may not be invoked by the court of its own motion. A contract that is relatively null may be confirmed.

1421. Unless the nature of the nullity is clearly indicated in the law, a contract which does not meet the necessary conditions of its formation is presumed to be relatively null. II. Effect of nullity 1422. A contract that is null is deemed never to have existed. In such a case, each party is bound to restore to the other the prestations he has received. III. Confirmation of the contract 1423. The confirmation of a contract results from the express or tacit will to renounce the invocation of its nullity. It results only if the will to confirm is certain and evident. 1424. Where the nullity of a contract may be invoked by each of the parties or by several of them against a common opposite party to the contract, confirmation by one of them does not prevent the others from invoking nullity.

DIVISION IV INTERPRETATION OF CONTRACTS

1425. The common intention of the parties rather than adherence to the literal meaning of the words shall be sought in interpreting a contract. 1426. In interpreting a contract, the nature of the contract, the circumstances in which it was formed, the interpretation which has already been given to it by the parties or which it may have received, and usage, are all taken into account. 1427. Each clause of a contract is interpreted in light of the others so that each is given the meaning derived from the contract as a whole. 1428. A clause is given a meaning that gives it some effect rather than one that gives it no effect. 1429. Words susceptible of two meanings shall be given the meaning that best conforms to the subject matter of the contract. 1430. A clause intended to eliminate doubt as to the application of the contract to a specific situation does not restrict the scope of a contract otherwise expressed in general terms. 1431. The clauses of a contract cover only what it appears that the parties intended to include, however general the terms used. 1432. In case of doubt, a contract is interpreted in favour of the person who contracted the obligation and against the person who stipulated it. In all cases, it is interpreted in favour of the adhering party or the consumer.

DIVISION V EFFECTS OF CONTRACTS

1. Effects of contracts between the parties

I. General provision 1433. A contract creates obligations and, in certain cases, modifies or extinguishes them. In some cases, it also has the effect of constituting, transferring, modifying or extinguishing real rights. II. Binding force and content of contracts 1434. A contract validly formed binds the parties who have entered into it not only as to what they have expressed in it but also as to what is incident to it according to its nature and in conformity with usage, equity or law. 1435. An external clause referred to in a contract is binding on the parties. In a consumer contract or a contract of adhesion, however, an external clause is null if, at the time of formation of the contract, it was not expressly brought to the attention of the consumer or adhering party, unless the other party proves that the consumer or adhering party otherwise knew of it. 1436. In a consumer contract or a contract of adhesion, a clause which is illegible or incomprehensible to a reasonable person is null if the consumer or the adhering party suffers injury therefrom, unless the other party proves that an adequate explanation of the nature and scope of the clause was given to the consumer or adhering party. 1437. An abusive clause in a consumer contract or contract of adhesion is null, or the obligation arising from it may be reduced. An abusive clause is a clause which is excessively and unreasonably detrimental to the consumer or the adhering party and is therefore not in good faith; in particular, a clause which so departs from the fundamental obligations arising from the rules normally governing the contract that it changes the nature of the contract is an abusive clause. 1438. A clause which is null does not render the contract invalid in other respects, unless it is apparent that the contract may be considered only as an indivisible whole. The same applies to a clause without effect or deemed unwritten. 1439. A contract may not be resolved, resiliated, modified or revoked except on grounds recognized by law or by agreement of the parties.

 2. I.

Effects of contracts with respect to third persons General provisions

1440. A contract has effect only between the contracting parties; it does not affect third persons, except where provided by law. 1441. Upon the death of one of the parties, the rights and obligations arising from a contract pass to his heirs, if the nature of the contract permits it. 1442. The rights of the parties to a contract pass to their successors by particular title if they are accessory to property which passes to them or are directly related to it.

II.

Promise for another

1443. No person may bind anyone but himself and his heirs by a contract made in his own name, but he may promise in his own name that a third person will undertake to perform an obligation, and in that case he is liable to reparation for injury to the other contracting party if the third person does not undertake to perform the obligation as promised.

III.

Stipulation for another

1444. A person may make a stipulation in a contract for the benefit of a third person. The stipulation gives the third person beneficiary the right to exact performance of the promised obligation directly from the promisor. 1445. A third person beneficiary need not exist nor be determinate when the stipulation is made; he need only be determinable at that time and exist when the promisor is to perform the obligation for his benefit. 1446. The stipulation may be revoked as long as the third person beneficiary has not advised the stipulator or the promisor of his will to accept it. 1447. Only the stipulator may revoke a stipulation; neither his heirs nor his creditors may do so. If the promisor has an interest in maintaining the stipulation, however, the stipulator may not revoke it without his consent. 1448. Revocation of the stipulation has effect as soon as it is made known to the promisor; if it is made by will, however, it has effect upon the opening of the succession. Where a new beneficiary is not designated, revocation benefits the stipulator or his heirs. 1449. A third person beneficiary or his heirs may validly accept the stipulation, even after the death of the stipulator or promisor. 1450. A promisor may set up against the third person beneficiary such defenses as he could have set up against the stipulator.

IV.

Simulation

1451. Simulation exists where the parties agree to express their true intent, not in an apparent contract, but in a secret contract, also called a counter letter. Between the parties, a counter letter prevails over an apparent contract. 1452. Third persons in good faith may, according to their interest, avail themselves of the apparent contract or the counter letter; however, where conflicts of interest arise between them, preference is given to the person who avails himself of the apparent contract.

3.
I.

Special effects of certain contracts

Transfer of real rights

1453. The transfer of a real right in a certain and determinate property, or in several properties considered as a universality, vests the acquirer with the right upon the formation of the contract, even though the property is not delivered immediately and the price remains to be determined. The transfer of a real right in a property determined only as to kind vests the acquirer with that right as soon as he is notified that the property is certain and determinate. 1454. If a party transfers the same real right in the same movable property to different acquirers successively, the acquirer in good faith who is first given possession of the property is vested with the real right in that property, even though his title may be later in time. 1455. The transfer of a real right in an immovable property may not be set up against third persons except in accordance with the rules concerning the publication of rights.

II.

Fruits and revenues and risks incident to property

1456. The allocation of fruits and revenues and the assumption of risks incident to property forming the object of a real right transferred by contract are principally governed by the Book on Property. The debtor of the obligation to deliver the property continues, however, to bear the risks attached to the property until it is delivered.