Monday September 06 2021
When In Doubt, Write It Down.
Under Quebec law, to document or prove a contract, it is prudent to prepare and sign a written agreement.
While non-written or verbal contracts are also valid, there are several rules of law and rules of evidence which favour the existence and preparation of written agreements.
The primary rule is that contracts may not in general be proved between the parties where the subject matter is worth more than $1500, by oral testimony. So, if you loaned your brother-in-law $2000 in cash, and he promised to pay you back in a month, in principle, if he refuses to repay you, you cannot prove that agreement with testimony only.
If you and your business partner sign an agreement to run your enterprise on a 50/50 basis, but you made a secret verbal agreement that you would take 65% of the profits, you run up against a rule that prevents parties to a written contract from testifying to contradict the terms of the written agreement.
Now there are exceptions to these rules.
If the contract concerns something below $1500 in value, then testimony is always admissible to prove its existence.
In the absence of a written agreement, you can by testimony prove a contract against a person who made the agreement in the ordinary course of business. So, one business could prove a contract against another business by testimony, and a consumer can prove a contract against a merchant by testimony. However, a merchant cannot prove the existence of a contract against a consumer by testimony.
It may also still possible to prove contracts by testimony, where the matter is worth more than $1500 or to contradict a written agreement, but you need something from the other side that makes your case more probable to make your testimony admissible. For example, even if there is no written agreement, perhaps the other side has a private paper which seems to indicate that a different agreement exists. Perhaps they wrote something in an email that can open the door oral testimony of the verbal contract. Or during testimony, either in preliminary discovery or at trial, they admit something that renders your testimony admissible.
The admissibility of oral testimony is just 1 hurdle. Even when the oral testimony is admissible and is not dismissed by the judge, it may still be insufficient when the judge rules on the merits of your case to decide whether or not you have proved that the verbal contract existed.
That is why, when there is any doubt, even with family, put your contracts in writing. In addition to defining the terms in the document, it becomes far easier to prove that the contract exists.
For all questions regarding the preparation and conclusion of your important contracts, please consult your lawyer or your notary.
Franco Tamburro, Attorney-at-Law
Alepin Gauthier Avocats Inc.
This text contains legal information of a general nature and should not replace legal advice with a lawyer or notary who will take into account the particularities of your situation.