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First, the fine print... The following content is based on judgments rendered by the courts in Quebec and elsewhere in Canada, is shared as general information only, does not constitute a legal opinion on our part and does not establish a solicitor-client relationship. The law discussed here may be modified or may have been modified and the facts of the case are not necessarily the same as those that may concern you. Be prudent and consult an attorney before making an important decision. Each of our articles is based on authentic events, court cases and judgments, although we have, out of respect, attributed fictitious names to the implicated parties for publication purposes on the present web site. Your utilization of the present site is subject to the Terms and conditions of utilization. If you do not see a navigation bar at left, you may access the optimal version of our site by clicking here. To contact our Quebec City law firm, click here.

Check: a "final payment" may not be...

The following article is based on events, a court case and a judgment which are authentic, although we have, out of respect for the implicated parties, attributed fictitious names to them.

Two companies had been doing business for close to four years when a problem arose: Sales Inc. was late in its deliveries to Buy Inc., which caused serious problems to Buy Inc., so the directors of both companies initiated discussions relating to Sales Inc.'s invoices and talked about the possibility of Sales Inc. granting a credit to Buy Inc.

However, without the parties agreeing to anything, Buy Inc. made its own calculations, evaluated its damages, subtracted these damages from Sales Inc.'s invoicing and then mailed a check to Sales Inc. bearing the mention "final payment" on the front side ("Final payment for all indicated invoices and debit note"). Also, the check stub (debit note) joined to the check showed Buy Inc.'s calculations, while the envelope carrying the check was not addressed to the attention of anyone in particular, simply being addressed to "Sales Inc."

A Sales Inc. employee thereafter deposited the check in Sales Inc.'s bank account, after which Buy Inc. refused to pay Sales Inc.'s claim for the balance by invoking the "final payment" mention appearing on the check, after which Sales Inc. took legal action in order to recover the balance it deemed due.

In court, the Sales Inc. employee testified to the effect that she had deposited the check with several others concerning other business matters and that she had not noticed the "final payment" mention , which brought the court to conclude that this mention could not be opposed to Sales Inc. since, notably:

a) nothing showed that Sales Inc. had agreed to anything with Buy Inc. concerning any credit whatsoever; and

b) the fact that the mention "final payment" was written on the front side of the check, rather than on the back side, rendered the employee's testimony to the effect that she had not noticed it credible.

Here is what the court said in granting Sales Inc.'s claim:

"Although it is visible, since the mention is on the front side rather that on the back side, it is less evident for the person who, in the course of daily operations, affixes a stamp for deposit purposes on the reverse side of a check."

"The court cannot convince itself, considering the circumstances, that [Sales Inc.] knowledgeably decided to accept the check bearing the "final payment" mention and [to thus to grant a credit to Buy Inc.] or thereby conclude a transaction by which it renounced [to the balance]."

"The court's position would have been different if [Buy Inc.] had transmitted the check and the debit note directly to [the Sales Inc. director] while giving all required details to allow the latter to act knowledgeably. [emphasis added] In such circumstances, had the check been deposited, the "final payment" mention could have constituted a transaction or a partial remittance of debt [meaning that Sales Inc. could not have claimed any balance as being owed]."

Our conclusion: in such circumstances it is far better to clearly indicate the "final payment" mention (or, even better: "final Payment, with complete release and discharge") on both sides of the check and send it to the specific person in charge with an explanatory note.

[Court file number: 500-22-051649-005]

The right to sue a foreign State in commercial matters.

In the course of a legal action in damages taken before the Quebec courts against Italy by a former employee of its commercial delegation in Quebec, the Court of appeal dismissed Italy's motion to have the case quashed for lack of jurisdiction.

The court thereby decided that the usually applying State immunity could not be invoked here since the action concerned an employment contract and therefore implicated commercial activities.

This means that a foreign State may be sued before Quebec courts if circumstances allow, which in turn implies that this judgment may be very useful for people doing business in Quebec with a recalcitrant foreign State...

[Court file number: 500-09-011655-016.]

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