Executive Summary: Key Legal and Evidentiary Issues

• Validity of the personal guarantee (cautionnement) signed by Émilie Garant for the obligations of Maizon Construction Libre Inc.

• Determination of whether the guarantee is limited to $7,000 or covers the total amount of unpaid invoices.

• Interpretation of the contractual terms and the scope of the guarantee in the credit application.

• Effect of insolvency proceedings on the claim against Maizon Construction Libre Inc.

• Calculation and application of the contractual interest rate of 24% per annum on unpaid amounts.

• Award of legal costs to the prevailing party.

Facts and outcome of the case

Background and parties

Boiseries Bégin Inc. is a supplier of materials and merchandise to Maizon Construction Libre Inc. (MCL), a company involved in the construction of new duplexes and houses. After several years of business, a credit application form was sent by Boiseries Bégin Inc. to MCL, which was completed by MCL’s representatives, including Émilie Garant. Garant filled out the sections regarding the requested monthly credit and signed a personal guarantee on November 6, 2019. In April and May 2023, Boiseries Bégin Inc. delivered materials to MCL, resulting in four invoices totaling $39,531.70, which remained unpaid. Boiseries Bégin Inc. sent a formal demand for payment, but no payment was made. Boiseries Bégin Inc. then filed a claim against both MCL and Émilie Garant for the unpaid invoices, interest at 24% per annum from October 5, 2023, and legal costs.

Key legal issues and arguments

Émilie Garant contested the claim, arguing that the invoices related to a specific construction project, that MCL had not been paid by its own client, that her guarantee was limited to $7,000, and that the amount claimed was exaggerated. During the proceedings, an Avis de surseoir was filed on April 26, 2024, due to insolvency proceedings involving MCL, resulting in a stay of the case against the company. Garant admitted that the invoices were owed by MCL but maintained that her guarantee was limited to $7,000.

Court’s analysis

The court analyzed the validity of the guarantee, the circumstances of its signing, and its wording. It found that the guarantee was valid and expressly covered all present and future obligations of MCL to Boiseries Bégin Inc., not just the $7,000 monthly credit requested. The court determined that the guarantee was not a contract of adhesion and that Garant had the opportunity to negotiate its terms. The court also found that the contractual interest rate of 24% per annum applied, without the addition of the statutory indemnity under article 1619 of the Civil Code of Québec.

Outcome and orders

The court partially granted Boiseries Bégin Inc.’s claim. Proceedings against Maizon Construction Libre Inc. were stayed due to insolvency. Émilie Garant was ordered to pay Boiseries Bégin Inc. $39,351.70, with interest at the rate of 2% per month (24% per annum) from October 11, 2023, and legal costs.