The Civil Code of Québec (the "CCQ")
provides that a client can unilaterally terminate a service
agreement even where the work or provision of the services is
already in progress1. The corollary of this right of
unilateral termination is the client's obligation to compensate
the service provider for any loss it may have suffered, such as the
costs and expenses it has incurred, the value of the work performed
as at the termination date, and in some cases the value of any
property supplied to the client2.
Over the years, Quebec courts have come to recognize the
client's right to waive its unilateral termination right under
a service agreement3. The waiver however must be clear,
express, and consented to unconditionally by the client in full
appreciation of all ramifications. A clause containing such a
waiver is frequently included in service agreements.
In Services Matrec Inc. v. CFH
Sécurité Inc.4, the Court of
Appeal had to decide whether such a waiver survived the automatic
renewal of the agreement.
In that case, CFH Sécurité Inc. ("CFH")
had retained Services Matrec Inc. ("Matrec") for the
removal of waste from its place of business. The parties had
entered into a five-year agreement that was renewable automatically
on its expiration date. The agreement also contained an express
waiver by CFH of its unilateral termination right and a penalty
clause in the event of such termination, calling for payment of the
cost of delivering, installing and repossessing the equipment
required for performing the agreement and an amount equal to 12
months of waste removal fees.
Subsequent to the automatic renewal of the agreement on its
expiration date, CFH sent Matrec a notice of termination. Matrec
thereupon claimed from CFH the amount it considered to be due under
the penalty clause, alleging that the unilateral termination right
was not permitted under the agreement.
In overturning the first instance judgment of the Court of
Québec, the Court of Appeal found that the waiver of the
unilateral termination right may be subject to renewal.
The Court of Appeal pointed out that the agreement had been
automatically renewed upon the same terms and conditions as the
original agreement, there having been no discussion or negotiation
between the parties regarding any fundamental aspect of it, such as
The Court was of the view that by providing for automatic
renewal, the parties had agreed to keep the original agreement in
effect after its scheduled expiration date upon the same terms and
conditions, including the waiver of the unilateral termination
This judgment of the Court of Appeal clarifies how a waiver of
the unilateral termination right may survive the automatic renewal
of an agreement. Careful attention must therefore be paid to the
wording of such clauses, in order to ensure that they accurately
reflect the intention of the parties.
1 Article 2125 CCQ
2 Article 2129 CCQ
3 See, for example, MCA Valeurs mobilières Inc.
v. Valeurs mobilières Marleau, Lemire Inc., 2007
4 2014 QCCA 221
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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