A contract: Legal Agreement

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Many provinces, however, have adopted legislation codifying the rules of certain contracts, particularly sales and consumer contracts. Although Canada's 2 major legal systems differ in certain respects for contract law, the practical solutions they provide are very similar when not identical.


To be valid and therefore legally binding, 5 conditions must be met. The first condition there must be the mutual consent of both parties. No one can be held to a promise involuntarily made. When consent is given by error, under physical or moral duress, or as a result of fraudulent practises, the contract may be declared null and void at the request of the aggrieved party. In certain types of contractual relationship, the law demands that the consent of the party be both free and informed. This is the case, for instance, with contracts involving medical treatment.

The second condition is contractual capacity - the mental ability to keep the promise one has made. A young child, a person suffering from a serious mental disorder and sometimes even a minor are all considered incapable of contracting.

The third condition is that the contract should have an object or a purpose; it must concern a specific and agreed-upon good or service.

The fourth condition is "lawful cause" in civil law or a "valuable consideration" in common law. In this area, important technical differences exist between the 2 legal systems. Briefly, however, according to this fourth condition, the promise made must be serious and each obligation assumed by one of the parties must find a corresponding, but not necessarily equivalent or equal, promise made by the other party. A person may thus legally sell goods at a price that does not represent their actual market value. The contract would still be a valid one.

The fifth condition, which is not required in all cases, is the compliance in certain circumstances to formalities provided by law such as, for instance, a valid written instrument. In general, this condition holds for contracts that may have serious consequences for the parties, or those for which certain measures of publicity are required.


Parties to a valid contract are always bound by law to carry out their promise. Should they fail to, the other party is free to go to court to force them to comply. At times, the court may order the defaulting party to do exactly what he has promised (specified promise). In that respect, civil law provides more readily for the forced execution of promises than common law, for which specific performance is still an exception to the rule.

Courts may also award financial compensation in the form of damages equal in value to the loss suffered and profits lost as a result of the breach of contract, but this loss and profit must be directly related to the nonfulfillment of promise (article 1611 QCC). Furthermore, courts award only damages equivalent to those benefits that the parties might reasonably have expected to receive at the time the agreement was entered into.

Increasingly, provincial and federal legislatures are acting to protect citizens against certain abusive commercial practices. CONSUMER LAW, in which rules and standards are imposed to suppress FRAUD, to avoid forced sales and to protect the consumer against dishonest practices, is an example of this type of action. The new provisions of the Quebec Civil Code concerning performance in good faith (article 1375 QCC) and abusive, illegible or incomprehensible clauses (article 1379 QCC) go a long way to promote fairness in contractual relationship.

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