Resolving contractual disputes: an essential guide
Interpreting the contract
Many disputes stem from ambiguous clauses. The court seeks the common intention of the parties rather than the literal meaning (art. 1425 C.C.Q.), taking into account the nature of the contract, the circumstances and the parties’ conduct (art. 1426). In case of doubt, the contract is interpreted in favour of the party who contracted the obligation, and always in favour of the adhering party or consumer (art. 1432).
Steps
- Formal notice to the defaulting party (arts. 1594-1595), unless the debtor is in default by operation of law.
- Negotiation and, if provided in the contract, mediation.
- Arbitration if there is an arbitration clause, or court action.
Remedies
The creditor may demand specific performance, resolution or resiliation of the contract, reduction of its own obligation, and damages (art. 1590). A party may also refuse to perform its own obligation if the other does not perform (exception for non-performance, art. 1591).
Prescription
An action based on a personal right is prescribed by 3 years (art. 2925). Interrupting prescription requires a judicial demand or acknowledgment by the debtor; a simple formal notice does not interrupt it.
