Executive Summary: Key Legal and Evidentiary Issues

• Classification of the brokerage agreement as a commercial contract rather than a consumer contract, excluding the application of Quebec’s consumer protection regime.
• Inability of the defendant to invoke contractual lesion under article 8 of the Loi sur la protection du consommateur or the Civil Code rules on lesion, given his status and lack of proof of exploitation.
• Enforceability and scope of the liquidated damages clause (article 17) tied specifically to the monthly “frais de service et de gestion” under article 9 a) of the Convention.
• Determination that only the fixed operating expenses of 400 $ per month fall within article 9 a), excluding franchise-related and promotional fees from the liquidated damages calculation.
• Proof of outstanding amounts owed for the month of termination and failure of the defendant to disprove the detailed balance claimed in the invoices.
• Interpretation of the “four free months” clause in Annex A as a one-time incentive upon entry into the franchise network, not a recurring annual benefit, undermining the counterclaim for reimbursement.

Facts of the case

Re/Max Performance inc. is a real estate agency created in 1998 that does not serve buyers and sellers directly. Instead, it offers services and infrastructure to self-employed real estate brokers (représentants autonomes) who carry out the brokerage transactions with clients in their own name. In this context, Zhi Li, then a real estate broker, entered into a written “Convention de courtier immobilier” (the Convention) with Re/Max Performance on 15 October 2018, later supplemented by an Annex A signed on 23 November 2018. The Convention governed the financial obligations and the professional relationship between the broker and the agency. The parties agreed that the Convention would take effect on 1 December 2018 and remain in force until 1 December 2019. In practice, the parties reconducted the agreement tacitly, on the same terms and conditions, for successive one-year periods: from 1 December 2019 to 1 December 2020, then from 1 December 2020 to 1 December 2021, and finally from 1 December 2021 to 1 December 2022. During this time Mr. Li paid the monthly amounts specified in the Convention without putting the contract into question. In March 2022, before the latest renewal period had expired, Mr. Li decided to end his relationship with Re/Max Performance. By email dated 7 March 2022, he gave notice that he was terminating the Convention prior to the contractual end date of 1 December 2022. The Convention included a specific provision dealing with early termination. Under article 17, the self-employed representative could terminate the agreement by giving 30 days’ written notice, but in that event he agreed to pay Re/Max, as liquidated damages, an amount equal to twice the sum provided for at article 9 a) of the Convention. Article 9 a) required the broker to pay, as “frais de service et de gestion”, a fixed monthly amount of 400 $ plus applicable taxes, payable on the first day of each month, as well as a percentage of 5% plus applicable taxes on each remuneration received. After receiving Mr. Li’s notice of termination, Re/Max Performance invoiced him for the liquidated damages corresponding to two months, and for other unpaid amounts under the Convention. One invoice covered liquidated damages for early termination in the amount of 1,609.65 $ (taxes included). A second invoice covered outstanding contractual balances totalling 994.82 $ (taxes included). When Mr. Li did not pay, Re/Max Performance sent him a formal demand letter on 22 April 2022, granting him a deadline to cure the default. Payment not having been made, the agency brought a small claims action in June 2024, claiming 2,604.47 $ in principal.

Defence and counterclaim by the broker

In response, Mr. Li denied liability and attacked the enforceability of key clauses of the Convention. He argued first that the agreement was a consumer contract within the meaning of the Loi sur la protection du consommateur (L.p.c.). On that basis, he sought to rely on article 8 L.p.c., which allows a consumer to obtain nullity or reduction of obligations when there is serious disproportion between the parties’ prestations amounting to exploitation, or when the consumer’s obligation is excessive, abusive, or exorbitant. He maintained that the Convention was lésionnaire (oppressive) and that the clauses invoked by Re/Max Performance should be annulled or reduced. In parallel, Mr. Li filed a counterclaim. He relied on a clause in Annex A stating that the broker would benefit from “quatre mois gratuits, soit les mois d’avril, mai, juin et juillet; et le mois d’août est payable à la signature du contrat et n’est pas remboursable.” On his reading, this clause entitled him to four free months every year the contract was renewed. Because the Convention had been tacitly renewed for several years, he claimed he had overpaid during the 2019–2020 and 2020–2021 periods and sought reimbursement of portions of the monthly fees paid in those years.

Legal framework on contract formation, lesion and consumer status

The Court began by situating the case within the general law of contracts under the Civil Code of Québec (C.c.Q.) and the special regime of consumer protection. A contract is defined as an agreement of wills by which one or more persons obligate themselves towards one or more other persons to perform a prestation. It is formed by the exchange of consent between persons capable of contracting, and that consent must be free and informed, not vitiated by error, fear, or lesion. Under article 1405 C.c.Q., however, lesion only vitiates consent for minors and certain protected adults, except where a specific statute, such as the L.p.c., provides otherwise. Article 8 L.p.c. is one of those exceptions, but it is available only if the party qualifies as a “consommateur” within the meaning of the Act. The Act defines a consumer as a natural person other than a merchant who obtains goods or services for the purposes of his or her personal use and not for the purposes of a business. The Court noted that doctrine recognizes that some professionals can remain consumers when they are members of an order governed by the Code des professions and do not act as merchants for the purposes of the Law. However, the status of a real estate broker is distinct. A broker is not a member of a professional order under the Code des professions and instead operates under a business framework aimed at earning commission for brokerage services. On this basis, the Court held that Mr. Li did not meet the statutory definition of a consumer. As a result, the L.p.c., including article 8, did not apply to this contractual relationship. The defence of lesion was also unavailable under the general rules of the Civil Code, because Mr. Li was an adult, not under tutorship or protective regime, and no special statutory provision extended lesion to this type of contract. Beyond these formal barriers, the Court observed that Mr. Li presented no substantive evidence showing any concrete exploitation or gross disproportion between the respective prestations that might support a claim of vitiated consent.

Analysis of the liquidated damages and contractual amounts

Turning to the specific amounts claimed, the Court analysed article 17 of the Convention, which set out the mechanism of “dommages-intérêts liquidés” if the representative unilaterally terminated the agreement with 30 days’ written notice. The clause expressly tied the liquidated damages to “2 fois la somme prévue à l’article 9 a)”. Article 9 a) itself was limited to the fixed “frais de service et de gestion” of 400 $ per month plus taxes, and to a 5% fee on each remuneration received. Re/Max Performance claimed two months of 700 $ each, broken down as 400 $ in fixed operating expenses, 200 $ in “frais Re/Max Québec”, and 100 $ for the Re/Max Québec promotional fund, for a total of 700 $ per month plus taxes. The Court found that, as drafted, article 17’s reference to article 9 a) only captured the fixed operating expenses of 400 $, not the additional franchise and promotional components of 200 $ and 100 $, because those amounts were not explicitly part of article 9 a). As a result, Re/Max Performance was entitled, as liquidated damages, only to two times 400 $ plus applicable taxes. This led the Court to award 800 $ in principal, which, including taxes, amounted to 919.80 $ on this first head of claim.

The Court then examined the outstanding monthly amounts claimed for the month in which the contract was terminated. Mr. Li sent his notice of termination on 7 March 2022, so he remained bound to pay the full contractual charges for that month. Re/Max Performance produced a detailed invoice for 994.82 $ (taxes included) for that period. Mr. Li did not effectively contest the underlying figures at trial, and the Court accepted the invoice as proof of the debt owed for the month of his departure. Combining the liquidated damages awarded (919.80 $) and the unpaid March invoice (994.82 $), the Court granted Re/Max Performance a total of 1,914.62 $ in principal under the Convention. In addition, under article 27 of the Convention, interest at a contractual rate of 24% per year applied to amounts in default. The Court ordered that this interest run on the sum of 1,914.62 $ from 10 May 2022, the date on which the deadline set in the formal demand of 22 April 2022 expired, until full payment. The Court also granted court fees (droits de greffe) of 163 $ to Re/Max Performance on its main claim.

Assessment of the counterclaim on “four free months”

The counterclaim focused on the clause in Annex A dealing with “Gratuités”, which specified that the broker would benefit from four free months—April, May, June and July—while August was payable upon signing and non-refundable. Mr. Li argued that, because the Convention was tacitly renewed on the same conditions for three additional years, this four-month grace period recycled each year, entitling him to a total of several years of free months and reimbursement for payments made during the 2019–2020 and 2020–2021 periods. The agency’s owner, Ms. Marie-Michèle Daviault, testified that this free-month clause was a general feature in contracts involving Re/Max franchisees, designed to attract and help integrate new brokers into the network when they first join. It functioned as a one-time recruitment and integration incentive, not a recurring annual discount. The Court found this interpretation more coherent with the structure and purpose of the clause. Decisively, Mr. Li’s own conduct during the successive renewals undermined his position. For two full years of tacit renewal, he paid all twelve monthly instalments required by the contract without ever asserting that four of them per year were free, and without requesting any reimbursement. His behaviour was therefore inconsistent with his later interpretation of the Annex A clause. In light of the text of the clause, the testimony about its commercial purpose, and Mr. Li’s payment history, the Court rejected his broader interpretation and dismissed the counterclaim in its entirety, without costs against him.

Ruling and overall outcome

In its final orders, the Court partially allowed Re/Max Performance’s claim and rejected Mr. Li’s reconventional demand. It held that the Convention was a valid commercial contract governed by the Civil Code of Québec, not a consumer contract under the Loi sur la protection du consommateur, and that the defences based on lesion and consumer exploitation could not succeed. The Court enforced the early-termination liquidated damages provision, but strictly within the limits of article 17’s cross-reference to article 9 a), and it confirmed Mr. Li’s obligation to pay the outstanding March 2022 charges and the agreed contractual interest. Overall, the successful party was Re/Max Performance inc., which obtained a principal award of 1,914.62 $, plus 24% annual interest on that principal from 10 May 2022 and court fees of 163 $, for a fixed monetary total of 2,077.62 $ before interest accrual.