Non-execution of the contract: what are the possible recourses?

Contracts serve as vital legal instruments that establish rights and obligations between parties. When parties enter a validly formed contract, they are bound by its terms and are obligated to fulfill their respective commitments. However, in cases where one party refuses to perform their obligations, various recourses are available to ensure compliance.

Non-execution

The parties to a validly formed contract are bound by it (1434 CCQ). Both contracting parties are also thus bound to fulfill their obligations under the contract. Moreover, according to article 1590 al.1 CCQ, the obligation confers on the creditor the right to demand that it be performed fully, correctly and without delay.

If the debtor refuses to perform, there are several ways in which the creditor can force performance.

In some cases, he may have recourse to measures of constraint such as the exception, which is a recourse in which the other party can refuse to execute their obligation in response (1591 CCQ) or the right of retention (1592 CCQ).

In addition, he may at any time request execution by equivalent.

He can also force (1590 CCQ):

· The resolution.

· The resiliation of the contract.

· The reduction of his own correlative obligation.

· Take any other means provided by law.

To be able to resort to these sanctions, the debtor must first be in default (1590 CCQ) (Which means that the debtor is not performing his contractual obligations)

The case of contract for services

The contract for services brings together a client and a contractor or service provider. (Art. 2098 CCQ)

The Civil Code gives the customer a unilateral right of resiliation (Termination) (2125 CCQ).

Upon resiliation of the contract, the client is bound to pay to the contractor, in proportion to the agreed price, the actual costs and expenses, the value of the work performed before the end of the contract or before the notice of resiliation. (2129 CCQ)

The contractor may only unilaterally resiliate (terminate) the contract for a serious reason (Art. 2126 CCQ). This termination cannot be made after the obligation was completed and the interests of the client must be protected.

The entrepreneur will also be obliged to repair the damage suffered by the customer as a result of the termination of the contract. (2129 CCQ)

How to resiliate a contract?

The termination of a contract in Canada can be done either by mutual agreement of both parties or through legal action.

If both parties agree, they can sign a mutual termination agreement that specifies the date at which the contract will be terminated and any other terms and conditions.

However, if one party wishes to terminate the contract and the other party does not agree, legal action may be necessary.

Conclusion

The enforcement of contractual obligations is of paramount importance in maintaining the integrity and efficacy of business relationships. When a debtor refuses to fulfill their obligations, the creditor is not without recourse. By utilizing measures such as the exception, right of retention, execution by equivalent, contract resolution, correlative obligation reduction, and other legal remedies, the creditor can seek redress and ensure the proper execution of the contract.

At Boavista Legal Services, we are committed to upholding fairness and accountability in contractual relationships. Our comprehensive range of legal services equips parties involved with essential tools to safeguard their rights and interests. With our experienced team, we meticulously analyze contracts, develop personalized strategies, and provide transparent communication to ensure favorable outcomes.

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