The Regulation of Abusive or Unconscionable Clauses from a Comparative Perspective

Article 1437 of the Civil Code of Quebec (“C.C.Q.”), which came in force in 1994, states: 1437. An abusive clause in a consumer contract or contract of adhesion is null, or the obligation arising from it may be reduced.An abusive clause is a clause which is excessively and unreasonably detrimental to the consumer or the adhering party and is therefore not in good faith; in particular, a clause which so departs from the fundamental obligations arising from the rules normally governing the contract that it changes the nature of the contract is an abusive clause.This paper provides an analysis of the reasoning employed by Quebec courts in declaring a clause abusive. To this end, we relied on a classification based on the way questions of contractual injustice are analyzed by legal authors and in case law in other jurisdictions, such as the Canadian common law provinces, France and the United Kingdom. Contractual unfairness may be procedural (dealing with the process of contract formation and the imbalance between the parties’ bargaining power) or substantial (related to the unfairness of the obligations arising out of the contract). In common law jurisdictions, the rules aimed at curbing contractual unfairness, such as the doctrine of unconscionability or the rule concerning “onerous clauses,” typically require a combination of procedural and substantive unfairness.Art. 1437 C.C.Q. appears to provide for a purely substantive review of the contents of contracts. Procedural considerations would be dealt with when deciding whether the contract under review is a “consumer contract” (as per art. 1384 C.C.Q., which puts the emphasis on the presumed imbalance between the bargaining power of the parties) or a “contract of adhesion” (as per art. 1379 C.C.Q., which focuses on the lack of negotiation and unilateral drafting).Yet, our review of the case law shows that courts resort to arguments that are related to both substantial and procedural unfairness when deciding whether a clause is abusive within the meaning of art. 1437. Substantive considerations include: reciprocity: whether a clause confers the same rights on both parties or equally applies to both; commutability: whether a clause, which imposes obligations only on one of the two parties, is justified by the existence of another clause, imposing an obligation on the other party, which may be seen as consideration for the first clause or which reduces its adverse effects; equivalence of the value of the parties’ obligations; proportionality, i.e., a requirement that a contractual clause serve a valid purpose and that the means employed be proportional to that purpose; departure from the usual contents or from essential obligations of a particular kind of contracts; causal link between the breach of a contractual obligation of the adhering party and the purpose of the impugned clause.Courts have also relied on the following procedural factors to assess the abusive character of a clause: whether the consumer received adequate information about a clause that appears particularly unfair; departure from the reasonable expectations of the adhering party.This flexible approach could be the result of the judges’ reluctance to review the substance of contracts. Thus, as seen above, a clause is much more likely to be declared abusive if it was not brought to the attention of the consumer or if the consumer was not provided with sufficient information on its application and consequences. Conversely, a substantively unfair clause may, nevertheless, be declared valid, contrary to the apparent logic of the Code, if the adhering party was fully informed about it. Such decisions no doubt reveal the reluctance of judges, for whom autonomy of the will remains the cardinal principle, to strike down onerous clauses in the absence of evidence of some form of defect of consent.

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