Wednesday, October 20, 2021
HomeContractsHow Contracts Are Formed Under Quebec Laws (Overview)

How Contracts Are Formed Under Quebec Laws (Overview)

Looking to find out how contracts are formed under Quebec laws?

Are you looking to enter into a contract and want to read about contracting basics under Quebec laws?

Perhaps you are just a curious person reading up on the contract laws of Quebec.

No matter the reason, we’ve got what you are looking for.

In this article, we will look at how contracts are formed under Quebec laws in detail. We will look at the contract formation process, if a contract should be in writing, the offer, acceptance, promise to contract, location of the contract and more.

We have divided this article into the following sections to help you navigate to the relevant section:

Let’s get started…

How are contracts formed?

Contracts are formed when the parties to the contract are clearly defined, the object and cause of the contract are defined and the parties exchange their consent to enter into the contract.

So a contract is formed where there is an offer on the essential terms of the contract and there is acceptance of the offer.

For example, in a sales contract, the buyer and the seller are defined, the thing you are buying is defined and the price you will pay is defined.

With the parties, object and cause defined, a contract is formed.

We enter into contracts every day of our lives, whether we realize it or not.

When we say contract, we typically think of a written agreement duly negotiated by the contracting parties.

That’s the typical written contract.

A contract can be formed verbally as well. 

When you go to a coffee shop and buy a cup of coffee, you actually enter into a contract with the coffee shop.

The contract is formed when the essential elements of the contract are agreed upon by the parties.

It’s a verbal contract but it’s legally as valid as a written contract.

Here is the breakdown of this verbal contract with the coffee shop.

So you are the buyer and the coffee shop is the seller. 

The parties to the contract are clearly determined.

You ask for a medium coffee.

The object of the contract is made clear.

The coffee shop says you need to pay $2.50 and you agree to pay this price.

Now, the price for the object of the contract is also agreed up.

And bingo!

You now have a contract.

The parties, the object and price representing the essential elements of the contract are defined and agreement.

The verbal contract is as legally binding as a written contract.

Should a contract be in writing?

A contract by definition does not need to be in writing for it to have legally-binding effects.

Contracts are formed validly either verbally or in writing. 

It is always preferable to have a written contract with the obligations of the parties are extensive or the object of the contract is complex.

For instance, if you want to buy a cup of coffee, a verbal contract is just fine.

If you are looking to implement a software product in a large international company taking you a year to implement with hundreds of people involved, you will want to have a written implementation contract.

There are some cases where the Quebec laws will warrant that contracts be formed in writing failure of which the law will not recognize them.

That’s the case with consumer contracts.

Merchants selling to consumers must have a written contract in place and must observe the statutory formation requirements of the contract as outlined in the Quebec Consumer Protection Act

In other cases, contracts are formed legally when they are in writing and in a notarial format. 

This is the case for a marriage contract or a mortgage.

The law will only consider a marriage contract or a mortgage as legally binding when they are in writing and signed before the notary.

What is an offer?

Under Quebec contract laws, an offer is defined to be a proposal containing all the essential elements of the proposed contract to be formed and in which the offeror expresses willingness to be bound if the offer is accepted.

The offer can include terms of acceptance, but it’s not mandatory for an offer to have one.

If the offer has a term of acceptance, for example, the offeror gives the receiving party 3 days to accept, then the offer cannot be revoked until the timeline has expired.

If your offer does not have a term given for acceptance, then the offeror can send a notice of revocation of the offer at any time prior to the acceptance of the offer.

Once an offer is accepted, then a contract is formed.

Making an offer is the first step in the contract formation process.

Let’s see how an offer is accepted.

What is acceptance?

An acceptance is one party accepting the offer or proposal of another to form a contract. 

If the offer gives a timeline within which the offer must be accepted, then the offer can only be accepted within that timeline.

Acceptance past the offer term does not result in the valid formation of a contract.

If the offer was made without an acceptance term, then at any time the receiving party can accept it.

However, if the offeror sends a notice of revocation before the acceptance of the receiving party, then the offer will lapse and no longer be valid.

It must also be noted that the acceptance must be on the substantial elements of the offer. 

If an acceptance does not correspond to the acceptance of the terms of the offer made, then that acceptance does not in fact constitute an acceptance.

So for a contract to be formed, the offer must be accepted by the receiving party agreeing substantially to the essential components of the offer made.

The silence of the receiving party does not imply the acceptance of the offer.

If the receiving party remains silent and does not formally express an acceptance but the parties start executing their respective obligations towards one another, we can imply a contract to have formed based on usage.

What is a promise to contract?

A promise to contract is actually a legally binding contract where both parties promise one another to enter into a subsequent contract.

A promise is in itself a legally binding contract when formed.

For example, when you intend to purchase a home, you will typically purchase a home by agreeing on the terms of a promise to purchase.

With a promise to purchase, the buyer and the seller will negotiate the essential elements of the main contract they intend to sign for the purchase of the home and define in how long they will sing the home purchase agreement.

Typically, once a promise to purchase is mutually agreed upon, the parties obligate themselves to sign an actual contract for the transfer of the title from the seller to the buyer before a notary within 60 days from the signing of the promise to purchase.

So the promise to contract is a contract in itself.

The object of the contract is for the parties to sign another contract at a later point in time.

Once the subsequent contract is signed, then the obligations of the promise to purchase are fulfilled by the parties.

Who can sign a contract?

Contracts are formed between persons who have the capacity to contract.

For a person, having legal capacity in Quebec means that you must be 18 years of age and more.

A minor does not have the capacity to enter into contracts except in very specific circumstances.

For a company to enter into a contract, the company must be validly formed and the signing party duly authorized to sign the contract on behalf of the company.

A company is a legal entity that acts through physical persons.

There are instances where the representative of the company signs a contract although the company never authorized that person to enter into that contract.

In Quebec, contract laws define how to handle that situation in terms of contract validity.

For the purpose of this article, our takeaway is that a company will have the capacity to sign when the company is duly incorporated business.

Does it matter where the contract is signed?

The actual location where contracts are formed relevant.

The contract will typically be governed by the laws of where both parties have signed the contract unless the parties elect the application of the laws of another jurisdiction.

If the contracting parties are not at the same location, then the contract will be considered made in the place where the person who made an offer received the acceptance.

So if you made an offer to someone in Montreal and you are in Quebec City, then you receive the acceptance in Quebec City, the contract will be considered formed in Quebec City.

If you were in Quebec and the other party was in Ontario and you receive the acceptance in Quebec, based on Quebec laws, the contract is considered to have been formed in Quebec.

There is the concept of conflict of laws that can play a factor as Quebec laws and Ontario laws may differ in the application of their contract laws and both may recognize having jurisdiction over the contract depending on the specifics of a case.

The conflict of laws will follow its own governing rules and processes which is not the scope of this article.

On what day does the contract start taking effect?

Contracts are formed at the moment where an offer is accepted.

If the contract does not stipulate when the obligations of the parties are to start, then you can consider that the contract is legally binding as of the moment the acceptance is received.

In some cases, you can agree in the contract to determine the effective date of your contract.

You can sign a contract today and set the effective date in a month from now.

In that case, the contract is formed today but the obligations of the parties will only begin in a month from the signing date.

You can even set an effective date to be a date in the past.

You’ll need to be careful when you do that as you are legally binding yourself to obligations prior to the actual formation of the contract.

In some cases, the law prohibits you from setting an effective date or backdating your contract.

You’ll need to validate the reason why you’d like to set a retroactive effective date or backdate your contract and ensure you are taking a legal step under Quebec laws.

Takeaways

Knowing how contracts are formed is quite useful for anyone transacting in commercially or personally.

A contract is formed when there is an offer and acceptance.

A contract can be legally binding whether it is concluded in writing or verbally.

A promise to contract is a contract where the parties agree to sign a subsequent contract on the basis of the terms and conditions agreed upon in the promise to contract.

We enter into contracts every day.

Contracting is foundational for all of us to living and exchange as contributing members of our society.

We hope that this article was useful.

Should you need the services of a law firm in the Province of Quebec to provide you legal advice relating to how contracts are formed, contract laws in Quebec or any contracting matter, we will be happy to support you.

Our contract lawyers have the experience and competence to help you navigate different types of contracts and their formation, the negotiation process, execution and termination.

Good luck with your contracts!

RELATED ARTICLES

Latest Posts

Editor's Picks