General Law of Sale

Overview

The contract of sale (vente) is the most common nominate contract in Quebec civil law and the cornerstone of commercial transactions. The Civil Code of Quebec (Code civil du Quebec) devotes an entire chapter to it, layering specific rules on top of the general law of obligations. Sale is defined as a contract by which a person, the seller (vendeur), transfers ownership of property to another person, the buyer (acheteur), for a price the buyer obligates himself to pay (art. 1708 CCQ). This article surveys the general law of sale: forming the contract, the promise of sale, the transfer of ownership and risks, the seller's obligations of delivery (delivrance) and warranty, and the buyer's protections against hidden defects (vices caches). Throughout, the Consumer Protection Act (Loi sur la protection du consommateur, "CPA") supplements Code rules for consumer transactions.

Learning Objectives

Identify the essential elements required for a valid contract of sale and distinguish sale from related contracts such as enterprise and lease.
Explain the rules governing the promise of sale, including the effects of bilateral and unilateral promises and the action for forced transfer of title (passation de titre).
Describe how ownership and risk of loss transfer for individualized property and property determined as to kind.
Outline the seller's obligations of delivery and the warranty of ownership, including the specific regime for hypothecs.
Analyse the warranty of quality against hidden defects, including the conditions of the warranty and the presumption of knowledge imposed on professional sellers and manufacturers.
Recognize the additional protections the Consumer Protection Act provides in consumer sales, including the warranty of fitness, durability, and proper functioning.

Key Concepts and Definitions

Sale (vente): A contract transferring ownership of property for a price (art. 1708 CCQ).
Promise of sale (promesse de vente): A preliminary contract by which one or both parties undertake to conclude a future sale (art. 1396 CCQ).
Delivery (delivrance): The placing of the property at the buyer's disposal so that the buyer can take possession and enjoy it (art. 1717 CCQ).
Warranty of ownership (garantie du droit de propriete): The seller's obligation to guarantee the buyer's right of ownership against private-law and public-law encumbrances (art. 1723 CCQ).
Hidden defect (vice cache): A defect that renders the property unfit for its intended use or so diminishes its utility that the buyer would not have purchased it, or would have paid less, had the buyer known (art. 1726 CCQ).
Professional seller (vendeur professionnel): A person who sells property on a regular basis in the course of business, subject to a presumption of knowledge of defects (art. 1729 CCQ).
Lesion (lesion): A disproportion between the value of the respective prestations of the parties that may give rise to annulment or reduction in consumer contracts (art. 8 CPA).

Formation of the Contract of Sale

Sale is a consensual contract. An agreement on the thing and the price is sufficient to transfer ownership (art. 1385, 1388, 1708 CCQ). The general rules on the formation of contracts apply: offer, acceptance, capacity, object, and cause (art. 1377 ff. CCQ). The parties must have legal existence and the power to alienate. Art. 1709 CCQ prevents an administrator of the property of others (administrateur du bien d'autrui) from purchasing or selling the property entrusted to that person, to forestall conflicts of interest. Art. 1783 CCQ strikes with absolute nullity any sale or purchase of litigious rights by judges, advocates, notaries, or officers of justice.

Distinguishing sale from the contract of enterprise (contrat d'entreprise) is necessary because each generates different remedies. Unilateral resiliatement is available for enterprise and service contracts (art. 2125 CCQ) but not for sale. Where the work or service is merely accessory to the value of the property supplied, the rules of sale govern (art. 2103 CCQ).

The legislator imposes certain formal requirements that override consensualism. A sale of an immovable for residential use requires particular formalities (art. 1793 CCQ). In adhesion or consumer contracts, an external clause incorporated by reference must have been expressly brought to the attention of the adhering party, failing which it may be struck (art. 1435 CCQ). An illegible or incomprehensible clause in an adhesion or consumer contract is null if it causes prejudice to the consumer (art. 1436 CCQ). The CPA goes further: mandatory written form, duplicate copies, and signed documents are required for credit contracts, instalment sales, itinerant sales, and used-vehicle sales (art. 23, 25, 27, 30, 58, 131, 158 CPA). Non-compliance gives rise to the remedies of art. 272 CPA, including punitive damages.

The general rules on error, fraud (dol), and fear apply (art. 1398-1404 CCQ). Lesion is not, in principle, a ground for nullity of contracts (art. 1405 CCQ), but the CPA creates a major exception. A consumer sale may be attacked for objective lesion when the disproportion between the prestations is so considerable that it raises a presumption of exploitation, or for subjective lesion when the consumer's obligation is excessive, abusive, or exorbitant given the consumer's circumstances (art. 8, 9 CPA). The presumption of objective lesion is rebuttable: a lender may justify a 39.6% rate if the borrower's credit presents substantial risk.

Sanctions include nullity and reduction of the price. The CCQ adds that a defendant may avoid nullity by offering to reduce the creditor's obligation or increase the debtor's own (art. 1408 CCQ), a general rule applicable even to lesion claims under the CPA.

Prohibited and Regulated Clauses

The CCQ empowers courts to annul abusive clauses in adhesion or consumer contracts (art. 1437 CCQ) and to reduce an excessive penalty (art. 1623 CCQ). In the chapter on sale, art. 1733 CCQ renders without effect any exculpatory clause when the seller knew or could not have been unaware of the defect and failed to disclose it. Art. 1474 CCQ renders exculpatory clauses inoperative in cases of gross or intentional fault and for bodily or moral injury.

The CPA prohibits disclaimer clauses for the merchant's personal acts (art. 10 CPA), declares penalty clauses against the consumer without effect (art. 13 CPA), and subjects credit-sale penalties to strict regulation (art. 91, 92 CPA). A chapter on prohibited practices (art. 215 ff. CPA) imposes fines and creates a presumption that the consumer would not have purchased or would have paid less had the practice been known (art. 253, 272 CPA).

The Promise of Sale

Bilateral Promise

A bilateral promise of sale (promesse bilaterale de vente) is a preliminary contract (avant-contrat) by which one party undertakes to sell and the other to buy. It does not constitute a sale and transfers neither ownership nor any real right that may be registered (art. 1396 para. 2, 1397 CCQ). However, because this rule is suppletive, the parties may agree that their promise constitutes an actual sale.

If the promisor refuses to execute the deed of sale, the beneficiary may bring an action for forced transfer of title (demande en passation de titre) under art. 1712 CCQ. This specific performance remedy requires a valid and enforceable promise, a mise en demeure (where applicable), the presentation of a deed of sale conforming to the promise, and an offer and deposit of the price (art. 1576 CCQ). The action must be brought within the prescriptive period, and renunciation of the right to bring it is not presumed.

Where a promisor sells the property to a third party in violation of the promise, the beneficiary cannot annul that sale; the Code declares it opposable to the beneficiary (art. 1397 CCQ). The beneficiary's recourse against the third party in bad faith lies in extra-contractual damages (art. 1457 CCQ).

Unilateral Promise

A unilateral promise grants one party an option (art. 1396 para. 2 CCQ). If the beneficiary allows the deadline to pass without exercising the option, the right lapses unless the parties tacitly extend negotiations. Under art. 1396 para. 1 CCQ, an offer made to a determinate person is deemed a promise once the offeree clearly manifests the intention to consider it and to respond within a reasonable time.

Promise with Delivery

By way of exception, if delivery (tradition) and the taking of possession occur at the same time as the promise, the promise is deemed to be a sale and produces all the effects of sale immediately, including transfer of ownership and risks (art. 1710 CCQ). This presumption is rebuttable: a clause stipulating that ownership transfers upon the signing of the notarial deed prevents its application. If the buyer refuses to complete the sale after taking delivery, the seller may seek resolution and damages.

Sale of the Property of Another

A sale of the property of another (vente du bien d'autrui) arises when the seller does not own the property in full ownership, does not hold the real right being transferred, or lacks the mandate or legal power to alienate (art. 1713-1716 CCQ). The true owner may revendicate the property or seek nullity of the sale (art. 1714 CCQ). In the case of a movable sold in the ordinary course of the activities of an enterprise (activites d'une entreprise), the owner may not revendicate without reimbursing the good-faith buyer the price paid (art. 1714 para. 2 CCQ). Good faith is presumed (art. 2805 CCQ) but may be rebutted by evidence of wilful blindness.

The buyer who discovers that the seller was not owner may demand nullity (art. 1713 CCQ). The nullity is relative. Exceptions exist where the seller subsequently acquires ownership (art. 1713 para. 2 CCQ), where the sale took place under judicial authority (art. 1714 para. 1 CCQ), and where acquisitive prescription has run (three years for movables possessed in good faith, ten years in other cases: art. 2917-2919 CCQ).

Transfer of Ownership and Risks

Individualized Property

Where the sale concerns identified property, ownership transfers upon formation of the contract (art. 1453 para. 1 CCQ). However, the risks of loss remain with the seller until delivery (art. 1456 para. 2 CCQ), a rule inspired by the Vienna Convention on the International Sale of Goods. If the property perishes without the seller's fault between formation and delivery, the contract is resolved by operation of law and the buyer is released from the obligation to pay the price. After delivery, the buyer bears the risk.

Where the same movable has been sold to two buyers, the good-faith buyer first put in possession is the owner (art. 1454 CCQ). For immovables, the first to register prevails (art. 1455 CCQ).

Property Determined Only as to Kind

Ownership transfers only once the property has been individualized and the buyer has been informed of the individualization (art. 1453 para. 2 CCQ). No transfer of risk can occur before individualization and notice. After individualization but before delivery, total loss still falls on the seller; partial loss obliges the buyer to accept delivery at a reduced price.

Obligations of the Seller

Delivery

Delivery (delivrance) is the placing of the property at the buyer's disposal (art. 1717 CCQ). It is an obligation of result. The seller must hand over the property with all its accessories, including title documents, instructions for use, and juridical accessories such as existing leases or warranty rights transmitted under art. 1442 CCQ.

The property delivered must be rigorously conforming to what was agreed (art. 1561 CCQ). Non-conformity in characteristics, quantity, or area may constitute a breach of the obligation of delivery. If the delivered quantity or area is deficient, the buyer may obtain a price reduction; if the deficiency causes serious prejudice, the buyer may seek resolution of the sale (art. 1737 CCQ). If the seller is in default, the buyer of movable property may treat the sale as resolved without judicial intervention (art. 1736 CCQ).

Warranty of Ownership

The seller warrants the buyer against any private-law right that restricts or deprives the buyer of ownership, such as the right of a third party, a servitude, or a hypothec (art. 1723 CCQ). The seller must also warrant against encroachments (empietements) of which the seller was aware (art. 1724 CCQ) and against violations of public-law limitations that do not belong to the ordinary law of ownership (art. 1725 CCQ), provided the violation was consummated at the time of sale, was not declared or registered, and would not have been discovered by a prudent and diligent buyer.

For hypothecs, the seller must discharge them even if they were declared or registered, unless the buyer assumed the guaranteed debt. Failure to discharge triggers the buyer's right to compel the seller to clear the title (art. 1723 para. 2 CCQ).

The buyer must notify the seller within a reasonable time of discovering an encumbrance (art. 1738 CCQ). The warranty against the seller's personal acts (garantie du fait personnel) is imperative and cannot be excluded (art. 1732 CCQ).

Warranty of Quality: Hidden Defects

The warranty of quality (garantie de qualite) protects the buyer against defects that render the property unfit for its intended use or that so diminish its usefulness that the buyer would not have purchased it or would have paid less (art. 1726 CCQ). Five conditions govern the warranty:

Gravity. The defect must be serious enough that the buyer would not have contracted or would have paid less had the buyer known (art. 1726 para. 1 CCQ).
Ignorance. The defect must have been unknown to the buyer at the time of sale (art. 1726 para. 2 CCQ).
Latent character. An apparent defect is one that a prudent and diligent buyer could have discovered without recourse to an expert (art. 1726 para. 2 CCQ).
Anteriority. The defect must have existed at or before the time of sale. It need not have fully manifested itself; a latent defect suffices (art. 1726 para. 1 CCQ).
Denunciation. The buyer must give written notice to the seller within a reasonable time of discovering the defect (art. 1739 CCQ). The notice must describe the nature and gravity of the defect to allow the seller an opportunity to inspect and remedy.

A professional seller or manufacturer is subject to a presumption that the defect existed at the time of sale whenever the malfunction or deterioration occurs prematurely compared with identical or similar property (art. 1729 CCQ). The presumption is simple; the seller may rebut it by proving misuse, poor maintenance, or a cause attributable to the buyer. The Supreme Court of Canada, in General Motors Products of Canada Ltd. v. Kravitz, imposed on the manufacturer the most rigorous presumption of knowledge, leaving defences limited to development risk (risque de developpement) or force majeure.

The seller who knew or could not have been unaware of the defect is liable for damages beyond price reduction (art. 1728 CCQ). An exculpatory clause is without effect when the seller knew or is presumed to have known the defect (art. 1733 CCQ). A clause of sale at the buyer's risks and perils exonerates a non-professional seller but does not protect a professional seller.

Consumer protection overlay. The CPA adds a warranty of fitness (art. 37 CPA), a warranty of durability (art. 38 CPA), and a warranty of proper functioning for used automobiles and motorcycles (art. 159-166 CPA). These warranties are imperative (art. 261 CPA) and cannot be excluded. Under art. 53 para. 3 CPA, neither the manufacturer nor the merchant may plead ignorance of the defect: the presumption of knowledge is absolute.

Rights of the Sub-Acquirer

Art. 1442 CCQ transmits, by operation of law, all rights that are accessories of the property to the acquirer at particular title. The sub-acquirer (sous-acquereur) may invoke against the manufacturer the warranty arising from the original sale, following the rule established in Kravitz. In addition, art. 1730 CCQ makes the manufacturer, distributor, wholesaler, and importer co-debtors of the warranty owed by the immediate seller. Under the CPA, a sub-acquirer who purchased from a non-merchant consumer may exercise the warranty rights of the original consumer-purchaser directly against the manufacturer (art. 53 para. 4 CPA).

Practice Checklist

Confirm the seller has legal capacity and authority to alienate.
Distinguish the contract of sale from enterprise or service contracts (art. 2103 CCQ).
Verify compliance with formal requirements for consumer and adhesion contracts.
Obtain a certificate of location (certificat de localisation) and confirm the absence of undisclosed servitudes, hypothecs, and public-law violations.
Ensure the promise of sale is complete in all material terms before bringing an action for forced transfer of title.
Determine whether the seller is a professional seller subject to the presumption of knowledge of defects.
Give written notice of any defect to the seller within a reasonable time of discovery, before undertaking corrective work.
In consumer sales, confirm whether the CPA warranty of fitness, durability, or proper functioning applies in addition to the CCQ warranty.
In successive sales, determine whether the sub-acquirer's recourse lies under art. 1442 CCQ, art. 1730 CCQ, or art. 53 CPA.

Glossary

Abusive clause (clause abusive): A clause in an adhesion or consumer contract that is contrary to good faith and excessively disadvantageous to the adhering party (art. 1437 CCQ).
Action for forced transfer of title (demande en passation de titre): A judicial remedy compelling the promisor to execute the deed of sale, or obtaining a judgment that serves as the deed (art. 1712 CCQ).
Delivery (delivrance): The placing of the property at the buyer's disposal (art. 1717 CCQ).
Hidden defect (vice cache): A latent defect rendering property unfit for its intended use or so diminishing its utility that the buyer would not have purchased it at the agreed price (art. 1726 CCQ).
Lesion (lesion): Disproportion between the value of the parties' respective prestations that may ground nullity or reduction in consumer contracts (art. 8 CPA).
Professional seller (vendeur professionnel): A seller who regularly sells similar property in the course of business, presumed to know defects (art. 1729 CCQ).
Promise of sale (promesse de vente): A preliminary contract by which one or both parties undertake to conclude a sale (art. 1396 CCQ).
Sale of the property of another (vente du bien d'autrui): A sale in which the seller transfers property not owned in full ownership or without authority to alienate (art. 1713 CCQ).
Warranty of ownership (garantie du droit de propriete): The seller's guarantee that the buyer's ownership is free from encumbrances not declared at the time of sale (art. 1723 CCQ).
Warranty of quality (garantie de qualite): The seller's guarantee that the property is free from hidden defects (art. 1726 CCQ).

References

Civil Code of Quebec (Code civil du Quebec), art. 1377-1408, 1453-1456, 1561-1566, 1590-1606, 1700-1794, 2103, 2118, 2125, 2700, 2917-2919, 2925-2926, 2943.
Consumer Protection Act (Loi sur la protection du consommateur), CQLR c P-40.1, art. 1-13, 23-42, 53-54, 58, 131, 155-166, 215-278.
General Motors Products of Canada Ltd. v. Kravitz, [1979] 1 SCR 790.
ABB Inc. v. Domtar Inc., 2007 SCC 50.

This article is provided for educational purposes and does not constitute legal advice. For guidance on a specific situation, consult a qualified Quebec legal professional.

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