In Quebec, verbal agreements can carry legal weight, although there are some exceptions to consider. They can be a little more complex to prove and enforce compared to written agreements. According to the Civil Code of Quebec, forming a contract through spoken words is possible, as long as specific conditions are met. For a more detailed exploration of the components that make up a business contract, take a look at our in-depth blog post on the subject.
When Verbal Agreements May Not Suffice
Certain situations exist where verbal agreements might not be as suitable. This is especially true when the law requires a contract to be documented in writing or adhere to a specific format for validation. For example, contracts made between a merchant and a consumer must be in writing. In a similar vein, a hypothec on a property must also be made in writing and made by a notary.
Challenges of Handshake Agreements
When it comes to contracts made solely through verbal communication (often referred to as "handshake agreements"), the challenge goes beyond confirming that an agreement happened. The real complexity lies in demonstrating precisely what both parties agreed upon. Let's unpack this a bit.
First and foremost, it's crucial to establish that an agreement exists between the involved parties. For example, if services were provided or money exchanged hands, these actions could indicate an agreement. In most cases, the issue isn't whether an agreement existed, but rather the specific details of the agreement itself. What does the contract cover? Which goods or services are included? How and when are payments arranged? Many variables come into play. Allow us to elaborate with a hypothetical example.
Imagine two entrepreneurs, Alex and Jordan, meet at a networking event in Montreal. They engage in a discussion about collaborating on a new tech project. Enthusiastic about the venture, they agree on the project's general scope, responsibilities, and a tentative profit-sharing arrangement—all through spoken words. As weeks go by, misunderstandings arise regarding each party's commitments, the division of tasks, and the exact terms of the profit-sharing scheme. This is where the intricacy lies—proving the specifics of their verbal agreement.
Limitations on Verbal Testimony
Furthermore, it's worth noting that if a dispute involves an amount exceeding $1500, relying solely on verbal testimony won't suffice to prove the contract's existence (s 2862 Civil Code of Québec). This implies that, in cases where the disagreement concerns more than $1500, you can't solely rely on spoken accounts to establish the contract's existence.
To mitigate potential complexities and uncertainties tied to verbal agreements, we recommend committing agreements to writing. Opting for a written contract provides clarity, reduces the risk of misunderstandings, and simplifies the process of proving contractual terms should a dispute arise. At Astre Legal, we're equipped to provide guidance and tailored solutions, helping you navigate Quebec’s dynamic legal landscape with confidence.
This blog post is not legal advice and is for general informational purposes only. Always speak with a lawyer before acting on any of the information contained herein.