Broken Contract: What to Do

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Do you have a contract with someone who isn’t keeping their side of the bargain? There are a few things you can do.

Before going to court

Before you go to court and ask a judge for a ruling, you must consider other options for settling the dispute.

If you’ve already tried to negotiate but find it difficult to communicate with the other party, a mediator might be able to help. A mediator doesn’t take sides or decide who’s right or wrong. Instead, the mediator helps the parties communicate and reach an agreement.

In many situations you must also send a demand letter (mise en demeure) to the other party before you can file court proceedings.

Ask for compensation

You can ask the other person to pay you compensation (money) if they refuse to do what they promised under the contract, or if they aren’t doing it properly.

You can also ask for compensation for the harm and inconvenience you suffered. This type of claim (claim for damages) can be filed on its own or combined with the other recourses discussed below.

Have someone else do the work

If the other party refuses to perform the work under the contract, you could have someone else do it and then ask the other party to refund you for the cost of the work.

However, before having the work done by someone else, you must send the other party a demand letter to let them know. In other words, you’re giving them one last chance to do what they’re supposed to under the contract. You’re also telling them that unless they do what they promised, you’ll have someone else do the work at their expense.

It’s best to check with a legal advisor before asking someone else to do the work because you might not be refunded if this isn’t allowed. You might also be responsible for any harm caused by your decision.

Ask for a reduction of your own obligations

If you want to keep the contract going, even though the other party isn’t respecting their end of the deal, you can ask for a reduction of your own obligations (for example, paying a lower price).

You can try to reach an agreement with the other party about reducing your obligations, but if this isn’t possible, you can also file an application in court and ask a judge to do it.

Stop carrying out your own obligations under the contract

As a general rule you must perform your own obligations. But there’s an exception: you don’t have to carry out your side of the contract if the other party isn’t carrying out theirs.

Important! All of the following conditions must be met:

  • The other party was supposed to carry out their obligations first.
  • The part of the contract that the other party didn’t carry out must be substantial.
  • The obligation that you’re not going to carry out must be connected to the obligation the other party is refusing to perform.

It’s best to check with a legal advisor before you stop carrying out your side of the contract. If this isn’t allowed, you might be responsible for any harm caused by your decision.

Ending the contract

Sometimes you can cancel the contract if the other party isn’t performing their obligations. However, strict conditions must be met:

  • The other party has no valid reason for failing to perform their obligations. For example, these reasons can’t be due to your own fault or an event that is beyond the other party’s control, which is called a “superior force.”
  • The other party’s obligations (the ones they’re not carrying out) must involve an important aspect of the contract.

Obligation to minimize your damage

No matter what course of action you choose, you have an obligation to limit your damages. You must act like a reasonable and responsible person would in the same circumstances to avoid making the damage worse.

The courts are quite strict with people who claim compensation for damage that could have been avoided had they acted reasonably and responsibly.

Which court?

The amount of money in dispute determines the court where you should file your claim:

  • $15,000 or less: small claims division of the Court of Québec
  • from $15,000 to $84,999: Court of Québec
  • $85,000 and over: Superior Court

Next, you must determine at which courthouse to file your claim at. If your contract is with a merchant or an insurer, or in the case of an employment contract, you must file your claim at the courthouse of the district where you live.

In other situations, the place where the contract was formed often determines which courthouse will handle the case. A contract is usually formed in the place where both parties were located when they reached the agreement.

If the parties were not in the same place when they reached the agreement, then the contract was formed where the person who made the offer received the acceptance of the offer. For example, Patricia is in Quebec City and places an ad on the Internet to sell her bike. Olivier, who is in Trois-Rivières, sends Patricia an email saying that he accepts her offer to sell her bike. The contract was formed in Quebec City because this is where Patricia was when she received Olivier’s email accepting her offer.