A formal notice is the formal request sent by a creditor to a debtor who is late in fulfilling an obligation, ordering him to fulfill it within a specific time period, failing which he will face a lawsuit in case of default. How is a debtor placed in default? In what circumstances is this necessary? With certain exceptions, a formal notice must be sent to the debtor of the obligation or the creditor may lose his right to compensation.
The constitution of a formal notice (art 1594 C.c.Q)
The debtor is placed in default in four different cases:
- By the very terms of the contract, where it is stipulated that the mere passage of time to fulfill it will have this effect.
- By the extrajudicial request of the creditor to perform the obligation.
- By the lawsuit against him.
- By reason only of the law.
Extrajudicial demand (art 1595 C.c.Q)
The extrajudicial demand by which the creditor puts the debtor in default must be made in writing. The creditor must indicate a grace period or sufficient period of fulfillment during which he considers that the debtor can still fulfill his obligation. The time allowed must be reasonable and take into account the circumstances and nature of the obligation. Finally, even though the formal notice is not subject to compulsory service (Article 139 CCP), it is preferable to provide such proof by requesting the services of a bailiff or sending it by mail with acknowledgment of receipt.
Notice by legal claim (art 1596 C.c.Q)
Legal action brought by the creditor against his debtor, without the debtor having been otherwise formally noticed in advance by the extrajudicial request of his creditor, confers upon him the right to fulfill the obligation within a reasonable time.
In this case, the statement of claim serves as a formal notice. Therefore, if the debtor fulfills the obligation and remedies the default, legal costs will remain the responsibility of the creditor.
Default by operation of law (arts 1597 and 1598 C.c.Q)
The debtor may be in default solely by reason of law. This is called default by operation of law. Here, the legislator wishes to apply the principle of good faith in the performance of the contract. Default by operation of law occurs in several situations.
The passage of time
A default by operation of law may be given when the time required for the fulfillment of the obligation runs out. Here, the debtor is put in default when the obligation could be carried out usefully only in a certain timeframe which has expired.
In the case of urgent situations, the debtor is in default because he did not fulfill the obligation immediately despite an urgency. Urgency is defined as the need to act without delay.
Breach of an obligation
One of the situations in which default by operation of law may be given is in the event of a breach of an obligation not to do or when performance of the obligation is impossible. Here the debtor has done something that he should not have done and this simple action causes prejudice to the creditor. For example, the violation has a non-disclosure obligation. Also, the debtor is in default by operation of law if performance of the obligation is made impossible by his fault.
An intention not to perform the obligation
In this situation, the debtor is in default as soon as he has clearly shown the creditor his intention not to perform his obligation. This is the case when the debtor is informed of the situation and does not act.
A refusal to fulfill an obligation of successive performance
The debtor is in default by operation of law, in the context of a successive obligation, as soon as he refuses or neglects to fulfill it repeatedly. In the case of a lease, the lessee who repeatedly pays his rent in arrears after receiving a written notice from the creditor will be in default by operation of law. The legislator wishes to save the creditor from the obligation to issue a formal notice for each unpaid or late payment which would be expensive and tedious.
Default by operation of law, which is an exception to the obligation to make an extrajudicial request in writing, imposes an obligation on the creditor to prove the occurrence of one of the cases of default by operation of law, despite any statement and stipulation to the contrary (art 1598 CcQ).
The absence of a formal notice
The provisions relating to formal notice are of paramount importance, as the precedent has consistently demonstrated that the absence of a formal notice is crippling to the plaintiff’s claim. In this regard, the following judgments are an illustration of this: Fournier Industries inc. c. Sherbrooke (City of), (C.S., 2014-05-12), 2014 QCCS 2626, Blackburn c. Victor & Yves Electric Auto Service Companies Ltd. (2012 QCCQ 8936).
However, in the case of substandard workmanship, the absence of a notice of default is not crippling if the appeal relates to a claim for damages as long as the creditor has not made the repairs or disposed of the property. In this case, the notice of default is not crippling, since the debtor always has the opportunity to note the defects and poor workmanship and therefore to remedy. D’Amours c. Lévesque (2013 QCCQ 14859).
Defaulting process: having a lawyer’s advice
A formal notice is a delicate situation, whether you are a creditor or debtor, which requires the support of a legal professional. In order not to find yourself in a delicate situation and to respect imposed obligations and deadlines, it is best to receive proper counsel.
Bérard Avocat law firm can look into your situation and provide you with the appropriate solutions. If you wish to benefit from our support or obtain more information about a formal notice, contact our firm today. We will be happy to assist you throughout your legal process.