Stipulation for Third Parties

The jurists affiliated with PSP Legal will be able to support and advise you adequately with this type of contract.

While many questions can be answered with the help of the guides, sample letters and forms in our legal toolkit, an independent jurist affiliated with PSP Legal will always be happy to help you by answering any questions you may have.

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Of course, if you prefer to have an experienced practitioner take charge of your situation and intervene directly and quickly on your behalf, you can also request that one of the independent jurists affiliated with PSP Legal represent you by clicking here.

What is a stipulation for third parties?

Stipulation for third parties is a legal mechanism codified in article 1444 of the Civil Code of Quebec. It refers to a contract by which one person, the stipulator, obtains from another, the promisor, the performance of a service for the benefit of a third, the third-party beneficiary.

In other words, the promisor (the client) who undertakes to the stipulator (the general contractor) to perform an obligation (to pay) for the benefit of a third party (the subcontractor) gives the third party (the subcontractor) the right to demand performance of the obligation (payment) directly from the promisor (the client). The operation is therefore tripartite, and has the effect of making a third party, who is not necessarily a party to the contract at the time of its formation, a contractual creditor of the promisor In order for the stipulation to be fully effective, the third party beneficiary must accept it. The third party cannot be obliged to receive the advantages provided for in his favor by the stipulator.

Four conditions to be met

To give effect to this type of contract, the contract must meet the four conditions set out in County Line Trucking Ltd. v. Souveraine (La), compagnie d’assurances générales, 2015 QCCA 1370:

• The contract must be valid;
• The interest of the stipulator;
• The existence of a favourable beneficiary where the promisor must perform his obligations in his favour;
• The acceptance of the stipulation, and this acceptance must be brought to the attention of the promisor.

In this type of contract, only the promisor incurs civil liability and may be ordered to pay damages for non-performance of his obligations, given that the contract is subject to the general rules of civil liability, which apply in particular to the requirement of a direct and immediate causal link between the non-performance of the promise and the loss. Damages thus correspond to the loss suffered by the party deprived of the benefit of the contract with the third party.

Stipulation pour autrui thus creates a direct link between the promisor and the third-party beneficiary. Article 1444 of the Civil Code of Quebec stipulates that the third-party beneficiary may directly require the promisor to perform the promised obligation. However, the promisor may invoke all the defenses arising from the main contract with the stipulator, such as a non-liability clause.  

How we can help

Our legal toolkit includes a variety of online resources and links to templates and guides to help you better understand your obligations.

However, should the Legal Toolkit prove insufficient in your situation, you can obtain additional assistance by speaking with one of PSP Legal’s affiliated jurists:

• Online

• On the phone

• In person

Of course, if you prefer to have an experienced practitioner handle your situation, you can always request that one of the independent jurists affiliated with PSP Legal intervene on your behalf by clicking here. He or she will then be able to intervene directly and rapidly on your behalf by:

• Preparing, negotiating and drafting applications, procedures or any other legal documents related to your situation;
• Assisting and advising you on your legal rights and obligations;
• Representing you before the courts when legal action is taken;
• Guiding you through the choices available to you, leading to a fair and satisfactory solution.

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