Apparently, the age-old tradition of shaking hands stems from a ritual that allowed both individuals the opportunity to make sure the other one did not conceal a weapon. Throughout the years, this ritual has evolved to signify many things, one of which continues to be the conclusion of a verbal contract. Many clients have asked me if such an agreement is valid or, in other words, is it legally binding under Québec law?

The short answer is yes, but as always, the devil is in the details.

As a general rule, a verbal contract is just as valid as written contact. However, the Civil Code of Quebec does mention certain exceptions to this rule (for example, marriage contracts, mortgages or certain donations and mandates). For these exceptions, a written document is required. As such, for the mast majority of contracts, a verbal agreement is valid and legally binding. The difficulty with these verbal contracts lies not in their execution, but in proving their existence. When a dispute arises between two parties requiring a court’s intervention, should one party deny the existence of the verbal agreement, the court will be faced with a “he said, she said” situation. Moreover, the party that makes the claim (i.e. a concluded verbal contact) usually has the burden of proof to substantiate that claim.

In light of the above, should it be impossible for whatever reason to reflect the parties’ intentions in writing, it would be prudent to have at least one or more individuals around to witness the handshake. This would allow a party to summon these witnesses to testify in court should a dispute be litigated. That being said, if the amount claimed is over $1,500, it will be difficult to prove a verbal contract in court under Québec law since, in such a case, testimony evidence may only be admissible in limited circumstances.

If the verbal agreement was concluded without the presence of witnesses, you may consider “crystalizing” the contract in another way, such as fulfilling your end of the deal as early as possible so as to show the existence of a contract. Ideally, this should be done with the other party’s knowledge or complicity (by sending regular updates by email to the other party for example). It is important to note that such emails and other documentary evidence (faxes, letters, memos, etc.) will be quite useful in court (bonus points for proof or acknowledgments of receipt!). Even a short “thank-you email” may come in handy should you end up needing to prove the deal in front of a judge.

Equally important to highlight is the fact that in many cases, it is not the existence of the agreement that is in dispute, but the terms and conditions governing such agreement. In other words, as soon as the gist of a contact entails a more complex agreement (ex: commercial lease, shareholders’ agreement, employment contract, etc.), it would be wise to lay these terms down in writing. In such cases, it is less a question of trust than clarity.

So, if you are still debating whether you should require a contract in writing, as opposed to simply trusting the other party for the sake of convenience or cost efficiency, I leave you with the following words from author Stephen King:

 « The trust of the innocent is the liar’s most useful tool »

Any questions or ideas for our next article? Please contact us at the 514-856-5601 (320) or at malek@maleklaflamme.ca.

Is a verbal contract legally binding?

As a general rule, a verbal agreement is just as valid as written contact. However, the Civil Code of Quebec does mention certain exceptions to this rule.

Sam Tardif Malek

Malek Laflamme l.l.p.