par.+107-116+(clauses+abusives)

// Click here for notes from CHRIS on correct provisions of new edition of Baudouin.

1437. La clause abusive d'un contrat de consommation ou d'adhésion est nulle ou l'obligation qui en découle, réductible.////Est abusive toute clause qui désavantage le consommateur ou l'adhérent d'une manière excessive et déraisonnable, allant ainsi à l'encontre de ce qu'exige la bonne foi; est abusive, notamment, la clause si éloignée des obligations essentielles qui découlent des règles gouvernant habituellement le contrat qu'elle dénature celui-ci.// // 1623. Le créancier qui se prévaut de la clause pénale a droit au montant de la peine stipulée sans avoir à prouver le préjudice qu'il a subi.////Cependant, le montant de la peine stipulée peut être réduit si l'exécution partielle de l'obligation a profité au créancier ou si la clause est abusive.//

[para. 107] - General observations Courts can change the amount of a penal clause. 1437 is restricted to adhesion and consumer contracts, while 1623 applies to all contracts. It is unnecessary (if not wrong) to use 1437 instead of 1623 when dealing with a penal contract case. The legislator could have adopted only 1623. The criteria for a clause to be abusive in 1437 are so generally that they barely limit 1623. 1623 should be applied without recourse to the principle of lesion (1405), but rather to good faith and equity. NB: Distinguish the abusive penal clause from "abus de droit" (abuse of a right).

[108] - Origins 1623 rejects the traditional notion of 'autonomy of the wills' to counter stipulations which run contrary to a basic sens of justice. 1623 puts into question the idea that a "contract, freely consented to, could never be unjust or abusive". Even with two corporate companies with equal bargaining power, judges reserve the right to quash abusive clauses.

[109] - Powers granted to the judge Judges have a lot of discretion to decide on what a penal clause is. However, judges only power then is to reduce the amount of the penal clause. A judge cannot cancel a penal clause entirely, or modify its modalities. Particular rules (ie: 1623) override general rules (ie: 1437) so it is unlikely a consumer or party to an adherance contract could use 1437 instead of 1623 to annul an abusive penal clause.

[110] France adopted a rule much like 1623 over 20 years ago. In France, distinction between (1) "peines compensatoires" (compensatory fine): compensate the injury by an amount determined in advance, about equivalent to amount of damages party would receive without the clause. (2) "peines comminatoires" (punitive fine): goal is to punish the breacher, amount exceeds the damages French courts only review (2) and don't attack clauses that deal with (1). France only deals with cases where the punitive fine (2) is egregiously higher than the damages. Quebec, by contrast, will review clauses dealing with both (1) and (2). Quebec courts are straying from the objective of only touching clauses which are egregious, and are playing a bigger role in contracts. Some doctrinal authors think this should be stopped.

[111] To determine if a clause is abusive, both in France and Quebec, courts look at: the clause itself, the context of the contract, and its link with other conventions between the parties. Much discretion is left to the court to determine the level of acceptability of the punishment. There are two guidelines though: (a) The debtor should not pay much more to the creditor than if there'd been no breach and the contract had been executed as planned. (b) Once the punitive fine is reduced by the court, it must remain substantially higher than just damages, to still play a punitive role.

[Morin told us to read until para. 116. But, from para. 112 onwards, Baudouin deals with //abus de droit// and not abusive clauses. I think Morin made a mistake in assigning the paragraphs.]