By Valentina Danielova Gueorguieva, University of Montréal, in collaboration with the Jeunes Auteurs Committee

A contract, in the civil law tradition, is viewed as being the harmonious expression of the free exercise of the parties’ will and the balance of their power relations. The provision against abusive clauses set out in CCQ 1437 is noteworthy as it reflects these broader concerns of justice. This post examines the “fundamental obligations” of contract referred to in CCQ 1437, as well as the legal remedies available to judges to address abuses of the same.

The fundamental obligation referenced in CCQ 1437 can be defined as “[TRANSLATION] an irreducible obligation, a contractual minimum that the parties can legitimately expect.”[1] In this sense, the fundamental obligation serves as “[TRANSLATION] the custodian of the substance of the contract [by] crystallizing the very basis of the contractual undertaking.”[2] The fundamental obligations of a contract are particularly effective against changes to the nature of the contract that that the legislature has addressed the second paragraph of CCQ 1437. For a clause to change the nature of a contract, it must be so contrary to the fundamental obligations, that the party that included it could have reasonably foreseen that the agreement itself would be reduced to an empty shell, in contradiction of the well-established legal principle that one cannot both undertake an obligation and, at the same time, not undertake it.[3]

In this regard, the Quebec Court of Appeal decision in Cloutier[4] is of interest, insofar stipulates that the assessment of an abusive clause is a question of fact.[5] The decision even establishes a threshold for an abusive clause: a change to the nature of the contract, per CCQ 1437, requires more than derogation from the object of the contract. In order qualify as abusive, the clause must alter the nature of the contract to such an extent that it interferes with its very performance.[6]

For example, a provision in a presale home inspection agreement that limited the inspector’s potential liability to the price paid for his or her services would be considered abusive. Indeed, the court rightly stated in Chen that limiting the fundamental obligations of prudence and diligence in this manner amounted to “[TRANSLATION] surety for carelessness or negligence in the inspector’s performance of the service he undertook to provide.”[7] These words are equally applicable to other contractual relationships.

So, the question arises: is the obligation of good faith a fundamental obligation within the meaning of CCQ 1437?

In our opinion, good faith cannot be reduced to a fundamental obligation that could alter the nature of the contract. To change the nature of a contract, a clause must affect its true spirit,[8] which arises from its nature and intent.[9] Good faith, however, is transcendent: [10] it is required in all agreements, regardless of content.

Essentially, a clause that alters the nature of a fundamental obligation amounts to “[TRANSLATION] cutting down the contract at the root.”[11] The fundamental obligations under CCQ 1437 are akin to markers that highlight abusive clauses. The role of correcting these violations, metaphorically erasing them from the contract,[12] has been given to the courts. The first paragraph of CCQ 1437 offers nullification of the abusive clause and reduction of the contractual obligations as tools of redress for the judge as architect,[13] who sculpts the marble that is the will of the parties with the Civil Code’s benevolent breath of good faith. As such, if contracts are meant to bind the future, it a fairer future that the Civil Code begins to capture by its provision against abusive clauses.

 

[1] Stéphanie GHOZLAN, “La notion d'obligation essentielle dans le cadre du contrôle des clauses abusives : Étude des systèmes juridiques français et Québécois”, (2015) 49 RJTUM, par. 32.

[2] Ibid., par. 95.

[3] François TERRÉ, Philippe SIMLER and Yves LEQUETTE, Droit civil : Les obligations, 11th ed., Paris, Précis Dalloz, 2013, no 610, p. 660.

[4] Cloutier c. Familiprix inc., 2014 QCCA 1959.

[5] Ibid., para 13.

[6] S. GHOZLAN, Op. cit., note 56, par 29.

[7] Chen c. Wanxing Développement des maisons Inc., 2013 QCCQ 5109, par. 25-27 (CanLII).

[8] Ibid., par. 59.

[9] Hydro-Québec c. Canmec Industriel inc., 2014 QCCA 919.

[10] Ibid. par. 61.

[11] Claude FERRON, “Les clauses de non-responsabilité en responsabilité civile contractuelle et délictuelle”, (1984) 44 R. du B. 3‑69, p. 56.

[12] S. GHOZLAN, Op. cit., note 56, par. 33.

[13] An expression used to illustrate the increasingly active and interventionist role of judges since the landmark decision in National Bank v. Soucisse et al., [1981] 2 SCR 339.