The Civil Code of Quebec recognizes that parties can, by way of contract, agree to settle a dispute by way of mutual concessions, often known as a settlement agreement or  a transaction:

2631.  Transaction is a contract by which the parties prevent a future contestation, put an end to a lawsuit or settle difficulties arising in the execution of a judgment, by way of mutual concessions or reservations.

A transaction is indivisible as to its object.

A transaction has the authority of a final judgment between the parties. What happens then when the transaction does not specify that one of the concessions has to be accomplished within a certain time limit?  This was a question recently before the Commission des relations du travail (“CRT”).

In this case, prior to an unjust dismissal hearing, the parties had agreed to participate in conciliation and had signed a transaction.  However, several months later, the complainant later found out that one of the points which the employer had agreed to – that the City Council endorse the agreement and reverse an earlier resolution regarding her dismissal – had not yet been completed.  She asked the CRT to reopen her file  for unjust dismissal.  The employer objected to this, arguing the existence of the transaction.

The CRT found that all of the essential elements of a transaction were present: mutual concessions to put an end to a dispute and the signing parties had the legal capacity to enter into the agreement.  While it recognized that a transaction could be conditional on the realization of future events, in this particular case, there was no such condition (i.e. that the endorsement and new resolution had to be adopted within a certain amount of time).  As such, even though it may have taken some time for the employer to fulfill one of its obligations, the transaction was valid and the CRT did not have authority jurisdiction to oversee how the obligation was to be executed.

This decision reminds us of the importance of properly wording a transaction and ensuring that it accurately captures the intention of the parties.  Ambiguities in such an important contractual document can lead to unnecessary (and additional) litigation, which is exactly what the parties were hoping to avoid in the first place.

Leave a Reply

Your email address will not be published. Required fields are marked *