What is a contract?
- 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 (art 1378 CCQ)
Contracts are classified based on different criteria:
- By formation
- Contract of Adhesion: take-it-or-leave-it contracts
- Contract of Mutual Agreement: negotiated terms
- By obligations
- Synallagmatic Contracts: mutual obligations
- Unilateral Contracts: only one party has an obligation
- By consideration
- Onerous Contracts: involving compensation
- Gratuitous Contracts: without compensation
- By risk
- Commutative Contracts: fixed obligations
- Aleatory Contracts: uncertainty obligations
- By performance
- Contracts of Instantaneous Performance: executed immediately
- Contracts of Successive Performance: performed over time
A contract is formed when:
- Exchange of consent (article 1385)
- Must be expressed (spoken or written) or tactic
- Offer and Acceptance (article 1387, 1390)
- Offer with no term expires in a "reasonable time"
- Offer with a term expires at a set date
- Death, bankruptcy, or protective supervision cause the offer to lapse
- Acceptance must match the offer (or it becomes a counter-offer)
- Silence does not equal acceptance
- Capacity to contract
- Adult: inapt adult (under protective supervision) cannot contract
- Minor (under 14 yo): Limited ability, except for employment and usual needs
Defect in Consent:
- A contract may be invalid if consent is defective
- Error (article 1400): mistaken belief about essential terms
- Fraud (article 1401): intentional deception
- Fear (article 1402): if obtained by coercion
- Lesion (article 1405): financial exploitation (only minors and inapt adults can claim this)
Nullity of Contract:
- Contracts not meeting legal conditions can be nullified:
- Absolute Nullity: if contracts violates the law
- Relative Nullity: if only one party is disadvantaged
Performance & Default:
- If one party fails to perform
- The creditor can refuse to perform their obligation, seek injunction, reduce performance, or cancel the contract
- Default occurs:
- By contract terms
- By warning or legal notice
- By operation of law
Interpretation of Contracts (articles 1425-1438):
- Court uncovers real intent
- Ambiguous terms favor the accepting party in contracts of adhesion
- Unfair or abusive clauses are null (article 1437)
- A void clause does not necessarily void the whole contract
Damages:
- Types of damages for breach
- Immediate and Direct Damages (article 1607): includes bodily, moral, and material harm
- Assessing Damages (article 1611): compensates actual loss and lost profit
- Future Damages (article 1611, par 2): if predicable
- Punitive Damages (article 1621): if legally justified
- Penal Clauses (article 1622-1623): Contractually set penalities for failure to perform
Case Law Examples:
- Peter v. Fiasche: Fraud in the sale of a restaurant, but the contract was found illegal and void
- Giroux v. Malik: Seller concealed defects in land, contract voided for fraud
- Richard v. Time: Misleading sweepstakes letter led to a lawsuit; court ruled against Time Inc. and emphasized limits on punitive damages
- TRM Copy v. Copiscope: Non-competition clause in copier contracts was ruled illegal, and injuction was denied