Modalities of Obligations: Conditions, Terms, and Pluralities

Overview

A modality (modalité) is a particular feature that affects one of the elements of an obligation. Obligations bearing a modality stand in contrast to pure and simple obligations (obligations pures et simples), which are immediately exigible and unconditional (JurisClasseur Québec, Obligations, fasc. 9, para. 1). While modal obligations often arise from contracts, they may also flow from extra-contractual relationships.

Quebec civil law classifies modalities into two broad families. Simple modalities affect the existence or exigibility of a single obligation through a condition or a term. Complex modalities introduce either a plurality of subjects (more than one creditor or debtor) or a plurality of objects (more than one prestation). These two categories are not mutually exclusive: a single obligation may be both conditional and subject to a term, or both solidary and indivisible.

Learning Objectives

After studying this lesson, readers should be able to:

• Distinguish a conditional obligation from an obligation subject to a term, and identify the practical consequences of each.

• Classify conditions as suspensive or resolutory, and determine when a potestative condition is invalid.

• Explain the effects of the suspensive and extinctive term, including forfeiture (déchéance du terme) and renunciation.

Conditional Obligations

Definition and Validity of Conditions

A condition is a future and uncertain event on which the existence of an obligation depends (art. 1497 CCQ). The condition may be formulated positively (an event occurs) or negatively (an event does not occur), and it may or may not be subject to a deadline.

An obligation may be made subject to either a suspensive condition (condition suspensive) or a resolutory condition (condition résolutoire). Under a suspensive condition, the birth of the obligation depends on fulfilment of the stipulated condition. Under a resolutory condition, the obligation exists immediately but will be extinguished if the condition is fulfilled. Determining which type applies requires examining the parties' intention at the time of formation.

Because the future and uncertain character of the event is essential, an obligation cannot be considered conditional if the event has already occurred, unknown to the parties, at the time the debtor undertook the conditional commitment (art. 1498 CCQ). The effects of that agreement must be determined without mechanically applying the conditional-obligation regime. A condition must also be materially and legally possible, and must not be prohibited by law or public order. A condition that fails these requirements is null and renders the dependent obligation null as well (art. 1499 CCQ). The nullity of the obligation may entail nullity of the entire contract if it is indivisible from the rest (art. 1438 CCQ).

Types of Conditions

Conditions are further classified by the degree to which they depend on the will of a party. A casual condition (condition casuelle) does not depend on the will of either party. A potestative condition (condition potestative or facultative) depends, in whole or in part, on the will of one party.

Doctrine distinguishes a purely potestative condition, leaving the decision whether to be bound to a party's mere discretion, from a simply potestative condition, consisting in doing or not doing a concrete act. Article 1500 preserves the latter even where the act is within the debtor's discretion. A mixed condition depends on a party and a third person, as with bank financing (JurisClasseur, fasc. 9, paras. 11–18).

Under art. 1500 CCQ, the obligation is null when its birth depends on the debtor's mere discretion. This rule concerns a suspensive condition controlled by the debtor. Other potestative conditions remain subject to the ordinary requirements of possibility, legality and public order (art. 1499 CCQ).

Effects of Conditions

The parties' position while the event remains uncertain depends on what the condition affects: the birth of an obligation or the continuation of an existing one. That distinction determines which steps are available during the waiting period, known as pendente conditione.

During the period of uncertainty (pendente conditione): A resolutory condition leaves an existing obligation in force, so performance remains due. A suspensive condition prevents the obligation from arising yet. In the latter case, the creditor can still protect its position through conservatory measures (art. 1504 CCQ) and transfer or transmit the conditional claim (art. 1505 CCQ). These possibilities do not open every remedy: an uncertain claim cannot support the oblique action or the action in unopposability. The rules on performance also reflect the waiting period. A prestation paid can be recovered because no current debt supports it (art. 1554 CCQ); the claim cannot yet be used for compensation (art. 1673 CCQ), and prescription has not begun (art. 2880 CCQ). Article 1503 CCQ treats a suspensive condition as fulfilled if the debtor's fault prevents its fulfilment.

For a positive condition with a deadline, the event must occur within that period. Without a deadline, the condition may be fulfilled at any time, but fails once it is certain it will not be fulfilled (art. 1501 CCQ). A negative condition is fulfilled when the period expires without the event occurring, or earlier once it is certain the event will not occur; without a period, that certainty is required (art. 1502 CCQ).

Upon resolution of the uncertainty: If the stipulated condition fails, an obligation subject to a suspensive condition never arises. An existing obligation subject to a resolutory condition instead continues without that uncertainty and becomes pure and simple. If the condition is fulfilled, arts. 1506 and 1507 CCQ generally attach consequences to an earlier date. The suspensive obligation is treated as having existed from the outset, validating intervening acts such as payments. The resolutory obligation must instead be unwound, with restitution of prestations already performed (arts. 1507, 1699 CCQ). The parties may modify these retroactive effects by agreement because retroactivity is not of public order.

Example: A buyer promises to purchase a property on condition of obtaining financing within 60 days. This is a suspensive condition. Pending fulfilment, the conditional obligation cannot be enforced. If financing is obtained, it takes effect retroactively; the promise to sell must still be distinguished from the sale itself. If the buyer's own fault prevents obtaining financing (for instance, by refusing to submit a loan application), the condition is treated as fulfilled under art. 1503 CCQ.

Worked Example: Commercial Real Estate Purchase Under Suspensive Condition

Factual Scenario

Hypothetical illustration. Investissements Immobiliers Mont-Royal entered into a preliminary contract to purchase a suburban commercial plaza from Gestion Commerciale Laurentienne for $3,800,000. The agreement contained a suspensive condition providing that the transaction was conditional upon Mont-Royal obtaining institutional first-ranking hypothecary financing of $2,800,000 at an interest rate not exceeding 6.5% within 45 days, and securing municipal zoning approval for an exterior drive-through lane. Assume that both conditions expressly benefit only the buyer and that zoning approval concerns the contemplated use, without being necessary for the legal validity of the sale.

Mont-Royal diligently submitted financing files to three chartered banks. Two weeks before the deadline, general commercial mortgage rates rose to 7.25%, and Laurentienne received an unsolicited cash offer of $4,100,000 from an institutional REIT. Seeking to escape the initial contract, Laurentienne served a notice of termination on Mont-Royal, claiming that prevailing financial market rates exceeded 6.5% and the financing condition had therefore failed. Within the original 45-day delay, Mont-Royal obtained written loan approval at 6.4% from a regulated commercial credit union and formally served notice that it waived the municipal zoning condition. Laurentienne refused to execute the deed of sale before the designated notary.

Obligations Subject to a Term

The Suspensive Term

A suspensive term (terme suspensif) is a future and certain event whose arrival renders an obligation exigible (art. 1508 CCQ). Unlike a suspensive condition, which affects existence, the suspensive term affects only exigibility. An obligation subject to a suspensive term exists from the outset; only its enforcement is delayed.

Elements:

• the event is future and certain;

• the obligation already exists;

• only exigibility is postponed.

Example: A loan repayable on 1 July exists immediately, but the creditor cannot sue for payment before that date unless the debtor loses the benefit of the term.

The suspensive term must be distinguished from a grace period (délai de grâce), by which a court or creditor gives the debtor an additional chance to perform after the obligation has already become exigible and the debtor is already in default.

While the term remains in effect, the creditor cannot compel payment. Early payment is possible if the debtor may renounce the term or the creditor accepts it; payment made freely and without error cannot be recovered merely because it was early (arts. 1511 and 1513 CCQ). The term also affects compensation (art. 1673 CCQ) and prescription (art. 2880 CCQ). The creditor holds a certain claim and may take conservatory measures (art. 1626 CCQ), including the oblique action (art. 1627 CCQ) and the action in unopposability, provided the claim will have become liquid and exigible by the time judgment is rendered (arts. 1628, 1634 CCQ).

A term may refer to a specific date, a period, an external event, or a party's decision to render the obligation exigible. For a period without a fixed date, the day marking the starting point is excluded and the day of expiry is included (art. 1509 CCQ). If the event assumed to be certain does not arrive, the term ceases to produce effects at the time the event should have occurred (art. 1510 CCQ). Where the term is indeterminate, a court may fix it on application by a party (art. 1512 CCQ).

Loss of Benefit of the Term

Three mechanisms cause a suspensive term to lose its effect, rendering the obligation immediately exigible.

Arrival of the term: The debt matures (vient à échéance) when the future and certain event occurs.

Renunciation (renonciation au bénéfice du terme): A party benefiting from the term may renounce it, making the obligation immediately exigible (art. 1515 CCQ). The term is presumed to favour the debtor (art. 1511 CCQ), but this presumption may be rebutted. A unilateral renunciation is valid only if the term is stipulated exclusively in favour of the renouncing party. Where the term benefits both parties (as in an interest-bearing loan), neither may impose a unilateral renunciation absent a contractual or statutory provision. A debtor who pays early freely and without error cannot recover the payment (art. 1513 CCQ).

Forfeiture of the term (déchéance du terme): The creditor may invoke forfeiture of the term when the debtor's capacity to pay is jeopardized. Legal forfeiture arises under art. 1514 CCQ in cases of bankruptcy, insolvency, diminution of securities by the debtor's act without creditor consent, or failure to respect conditions under which the benefit of the term was granted. A missed instalment does not by itself ordinarily establish statutory forfeiture of all future instalments. JurisClasseur discusses the need for a judicial determination of contested statutory grounds outside bankruptcy (fasc. 9, paras. 118–123). Contractual clauses remain subject to good faith, abusive-clause rules and special protections for loans, residential leases and consumer credit (arts. 1379, 1437, 1905 and 2332 CCQ; Consumer Protection Act, ss. 104–110). Forfeiture by one debtor cannot be raised against co-debtors, even in solidary obligations (art. 1516 CCQ), although it does produce effects against a surety (art. 2354 CCQ).

The Extinctive Term

The extinctive term (terme extinctif) is a future and certain event whose occurrence marks the end of the debtor's obligations (art. 1517 CCQ). It is the standard mechanism for limiting successive-performance obligations in time. Its arrival constitutes a mode of extinction of the obligation (art. 1671 CCQ). Accrued obligations that remain unperformed survive the term, such as unpaid rent for an earlier period (JurisClasseur, fasc. 9, para. 140).

An extinctive term may take the form of a date, a period, a notice given by one party to end an indeterminate-duration contract, or any other future and certain event. Where determination of the extinctive term poses difficulty, the rules governing the suspensive term apply by analogy (arts. 1509, 1510, 1512 CCQ). In Uniprix inc. v. Gestion Gosselin et Bérubé inc., 2017 SCC 43, paras. 70, 72, 79 and 103, the Supreme Court upheld an affiliation contract whose renewal mechanism could produce perpetual effects. Quebec law contains no general prohibition; the parties' common intention, limits governing particular contracts, and public order remain decisive.

Plurality of Subjects

Where an obligation binds more than one creditor or more than one debtor, the relationships among the parties vary depending on whether the obligation is joint and divisible, indivisible, or solidary.

Joint and Divisible Obligations

An obligation is joint (conjointe) between debtors when each can be compelled to perform only up to their share of the debt (art. 1518 CCQ). Between creditors, the obligation is joint when each may demand only their share of the claim. A plural obligation is joint and divisible by operation of law (arts. 1519, 1525 CCQ), unless the law or the parties provide otherwise.

Joint and divisible obligations place the risk of one debtor's insolvency on the creditor. In the absence of factors indicating unequal shares, the debt is presumed to divide in equal parts, by analogy with the rule for solidary debts (art. 1537 CCQ). An obligation may be divisible between debtors yet solidary by statutory provision; for the obligation to be truly divided in execution, it must be both joint and divisible.

Indivisible Obligations

An indivisible obligation (obligation indivisible) attaches to the object of the prestation and arises from two sources: the nature of the prestation (where it is not susceptible to material or intellectual division) or an express stipulation by the parties (art. 1519 CCQ). Divisibility depends on the nature and purpose of the prestation. Delivery of a living animal and an undertaking not to compete illustrate natural indivisibility. Stipulated indivisibility may render even monetary obligations indivisible regardless of their nature. A stipulation of solidarity alone does not confer indivisibility (art. 1521 CCQ).

The principal effect of indivisibility is that each creditor may demand the whole and each debtor may be compelled to perform the whole (art. 1520 CCQ). Indivisibility also transmits to heirs, unlike solidarity (art. 1520 CCQ), making it a valuable protective stipulation for creditors in case of a debtor's death. Interruption of prescription with respect to one creditor or debtor of an indivisible obligation produces effects with respect to the others; corresponding rules apply to suspension (arts. 2900, 2909 CCQ).

Indivisibility of the original prestation does not automatically make a monetary award indivisible (JurisClasseur, fasc. 9, para. 165). For a penal clause attached to an indivisible but non-solidary obligation, art. 1624 permits recovery of the whole penalty from the debtor responsible or each debtor's share, with recourse against the responsible debtor. Articles 1624–1625 govern penal clauses, rather than all damages claims.

Solidary Obligations Between Debtors

Passive solidarity (solidarité passive) allows the creditor to claim performance of the whole from any one debtor (art. 1523 CCQ). The obligation has a unity of object (one debt) and a plurality of links (multiple debtors).

Sources. A plural obligation is joint by default (art. 1525 CCQ). Solidarity arises by express stipulation, by statutory presumption for obligations contracted in the service or operation of an enterprise (art. 1525 CCQ), and by legal provision for co-authors of extra-contractual fault causing the same injury (art. 1526 CCQ).

Effects vis-à-vis the creditor. The creditor may choose which debtor to pursue (art. 1528 CCQ). The debtor pursued cannot require division of the action or prior pursuit of another co-debtor (art. 1528 CCQ). A suit against one debtor does not prevent the creditor from suing others, provided the creditor does not recover more than the total owed (art. 1529 CCQ). The debt divides among the debtor's heirs, subject to indivisibility (art. 1540 CCQ).

Defences. A solidary debtor may raise common defences (payment, extinction, prescription), personal defences that reduce the total debt by the relevant debtor's share (express release, compensation, confusion), and purely personal defences (incapacity, defects of consent, term) that only the debtor concerned may invoke (art. 1530 CCQ). Failure to raise an available defence may be held against the debtor in contribution proceedings (art. 1539 CCQ).

A debtor deprived by the creditor of a security or right available through subrogation is released to the extent of its value (art. 1531 CCQ).

Contribution among co-debtors. The debtor who pays more than their share exercises the rights of the common creditor by legal subrogation (art. 1656 CCQ), but the subrogated claim is stripped of solidarity (art. 1536 CCQ). Contribution is normally equal unless the debtors’ interests, including their respective responsibility for injury under art. 1478 CCQ, justify another allocation (art. 1537 CCQ). Insolvency of one co-debtor is borne by the remaining solidary debtors (art. 1538 CCQ).

Renunciation of solidarity. The creditor may release one debtor from solidarity while retaining the solidary remedy against the others for the whole (art. 1532 CCQ). Acceptance of a separate payment without reservation entails renunciation toward that debtor when the receipt specifies that payment is for that debtor’s share (art. 1533 CCQ). Separate interest or arrears payments have the narrower effects in art. 1534. Suing for one debtor’s share entails renunciation when that debtor acquiesces or judgment is rendered (art. 1535 CCQ). To protect the remaining co-debtors, the share of insolvency that would have been borne by the released debtor is assumed by the creditor (art. 1538 CCQ).

Solidary Obligations Between Creditors

Active solidarity (solidarité active) allows any one of several co-creditors to demand performance of the whole from the debtor (art. 1541 CCQ). It requires an express stipulation, which may be made in a contract or a will (art. 1541 CCQ; JurisClasseur, fasc. 9, para. 192), and is relatively rare. Payment to one co-creditor liberates the debtor toward all (art. 1542 CCQ). The debtor may choose which creditor to pay, unless one has already commenced proceedings (art. 1543 CCQ). Active solidarity does not pass to heirs (art. 1544 CCQ). Because insolvency of the co-creditor who received payment is borne by the other co-creditors, this modality carries risks and is seldom used in practice.

Imperfect Solidarity (In Solidum)

An obligation in solidum arises where co-debtors are each liable for the whole of the same debt, of distinct sources, without the obligation meeting the requirements of perfect solidarity or indivisibility. It produces the principal effect of solidarity (liability for the whole) without its secondary effects of mutual representation for formal demand and prescription (arts. 1599, 2900 and 2909 CCQ).

The doctrine applies in particular to distinct contractual and extracontractual obligations, or obligations under separate contracts, requiring repair of the same loss. Strict liability or a professional's involvement does not alone establish liability in solidum. JurisClasseur distinguishes established applications from debated extensions (fasc. 9, paras. 193–203).

Worked Example: Co-Debtors in Solidary Obligations and Contribution Recourses

Factual Scenario

Hypothetical illustration. Three business partners, Julie, Simon, and Patrick, formed an unincorporated joint venture to operate a green courier delivery service in Montreal. They purchased five commercial electric delivery vans for $300,000 from Flotte Electrique Pro Inc., executing a promissory note and vehicle sales agreement wherein they bound themselves expressly as solidary co-debtors for the full purchase price.

One year into operations, the joint venture defaulted on repayment, leaving an unpaid capital balance of $180,000. Flotte Electrique instituted legal proceedings exclusively against Simon for the entire $180,000. To prevent the registration of a legal hypothec against his personal residence, Simon satisfied the judgment by paying $180,000 in full. Simon then instituted a recourse in contribution against Julie and Patrick, demanding $60,000 from each. Julie was completely insolvent and filed an assignment in bankruptcy with zero realizable assets. Patrick argued he was only liable for his initial one-third internal share of $60,000 and refused to absorb any portion of Julie's bankrupt debt.

Plurality of Objects

When an obligation involves more than one prestation, the relationship among those prestations determines whether the obligation is conjunctive, alternative, or facultative.

Conjunctive Obligations

A conjunctive obligation (obligation conjonctive) requires the debtor to perform all specified prestations cumulatively. Failure to perform one amounts to partial performance and breaches the principle of indivisibility of payment (arts. 1522, 1561 CCQ). The CCQ does not provide a distinct regime for conjunctive obligations.

Alternative Obligations

An alternative obligation (obligation alternative) involves two or more prestations of equal rank; performance of any one liberates the debtor (art. 1545 CCQ). The debtor cannot perform parts of different prestations; each chosen prestation must be performed in full (art. 1547 CCQ). If one of the contemplated prestations cannot validly form the object of an obligation, the obligation is not alternative (art. 1545 CCQ).

The choice of prestation belongs to the debtor unless the parties agree otherwise (art. 1546 CCQ). If the party entitled to choose fails to do so, the other party may put them in default and, after expiry of the allotted time, make the choice instead (art. 1546 CCQ).

Impossibility of performance depends on who holds the right of choice:

• Debtor's choice: If not all prestations become impossible, the debtor must choose an available one (art. 1548 CCQ). If all become impossible and at least one impossibility is due to the debtor's fault, the debtor is liable for the last available prestation (art. 1548 CCQ). If all become impossible without the debtor's fault, the obligation is extinguished (art. 1550 CCQ).

• Creditor's choice: If one prestation remains possible and the other became impossible through the debtor's fault, the creditor may require either specific performance of an available prestation or performance by equivalence of the impossible one (art. 1549 CCQ). If all prestations become impossible through the debtor's fault, the creditor may claim damages for non-performance of either prestation (art. 1549 CCQ). If all become impossible without the debtor's fault, the obligation is extinguished (art. 1550 CCQ).

Example: A supplier agrees to deliver either 100 units of Product A or 100 units of Product B, at the buyer's choice. Product A is destroyed by fire attributable to the supplier's negligence. The buyer may demand delivery of Product B in kind or damages equivalent to Product A.

Facultative Obligations

A facultative obligation (obligation facultative) involves a principal prestation and an accessory prestation; performance of either liberates the debtor (art. 1552 CCQ). Unlike an alternative obligation, the two prestations are not of equal rank: the accessory follows the principal. If the principal prestation is null (for instance, as contrary to public order), the debtor is not bound to the accessory. If the principal becomes impossible through fault, the debtor must perform the accessory or pay damages for non-performance of the principal. If the principal becomes impossible by superior force, the debtor is liberated altogether (art. 1552 CCQ).

The creditor can require only the principal prestation. The right to substitute performance always belongs to the debtor, distinguishing it from both the alternative obligation (where the choice may be the creditor's) and the penal clause (where the creditor exercises the choice under art. 1622 CCQ).

Case and Article Pointers

• arts. 1497 to 1552 CCQ: conditions, terms, plurality of subjects, and plurality of objects

• arts. 1523 to 1544 CCQ: passive and active solidarity

• arts. 1628, 1634, 1699, and 2354 CCQ: conservatory remedies, restitution, and surety effects

Practice Checklist

• Identify whether an obligation is pure and simple or subject to a modality.

• For a condition, determine whether it is suspensive or resolutory and verify its validity under arts. 1497 to 1500 CCQ.

• For a purely potestative condition, confirm that it does not depend on the sole will of the debtor in a suspensive context, which would trigger nullity.

• Confirm whether a term is suspensive or extinctive; assess who benefits from the term (debtor, creditor, or both).

• In multi-party obligations, determine whether the obligation is joint, indivisible, or solidary and identify the applicable legal or conventional source.

• Draft an express solidarity clause that clearly distinguishes liability for the whole from liability limited to each debtor's share.

• Where indivisibility is desired, stipulate it expressly; a solidarity clause alone does not create indivisibility (art. 1521 CCQ).

• For an alternative obligation, specify who may choose and when; in a facultative obligation the debtor alone may choose the substitute.

• Assess forfeiture-of-term clauses for conformity with consumer protection rules and adhesion contract standards (arts. 1379, 1437 CCQ).

• When pursuing a solidary debtor, consider calling all co-debtors into the proceedings by forced intervention to facilitate contribution determinations.