Before a court can conclude that you are liable to compensate the other party for damages, three essential elements must be proven:

1) You must have committed a fault:

Like everyone else, you have an obligation to keep the promises you make in a contract. If you fail to fulfill your commitments, you may have to pay for any resulting damages. In court, most of the time the person you made the contract with has to prove that you didn’t fulfill your obligations. There are also obligations that go beyond the contract itself. For more information, consult the Infosheet entitled Civil liability.

There are some cases where you are presumed to be at fault – when you promise to provide a specific result and then fail to do what you promised. In these cases, it is not up to the other person to prove that you were at fault. Instead, you have to show that you weren’t. For example:

• you are obliged to pay the full amount for something you bought, but you pay only a portion of the amount;
  
• you have been hired to make a wedding dress, but unfortunately, you had it delivered the day after the wedding;
  
• you promised not to compete with your former employer, but you opened a company similar to his not far from his place of business;
  
• you were supposed to deliver furniture, but it was stolen from your warehouse, which was protected by a deficient security system;
  
• You were hired to make maple cupboards, but you deliver pine cupboards.

2) The person you contracted with must have suffered harm resulting from your fault (this could include the cost of finishing the work or having work carried out, interest on amounts owed, the loss of a sale, costs of hiring an expert, etc.).

3) The fault that you committed must be the immediate and direct cause of the damage to the other party. Lawyers often say that there has to be a “causal link” between the fault and the damage.

Depending on the situation, several options for action are available:

• you can ask the court to make the other person (co-contractor) pay the cost of performing the work. In law, this is called “specific performance by equivalence.” This can happen when, for example, the co-contractor refuses to do the work you hired him for, or does the work badly. You can get compensation to pay for the work to be finished, by you or by somebody else;
  
  
• you can ask the court to make an order – called an injunction – to force your co-contractor to fulfill his obligations. The court will only give the order if there is a risk that you will suffer damage so serious that it might not be possible to fix later. This can happen when a person fails to respect a non-competition clause, for example;
  
  
• you can ask that the contract be resiliated (cancelled), but only if the following is true:
  
  a) there is no good excuse for failing to honour the contract, and the non-performance is the co-contractor’s fault. If an unpredictable, uncontrollable external event (a superior force) happens, then the co-contractor cannot be made responsible. You won’t be able to ask for the contract to be cancelled if this happens;
  
  b) the non-performance must be serious. If all the co-contractor missed was a minor detail that wasn’t central to the contract, this won’t be enough to cancel the agreement. Instead, a reduction in your obligations, such as a lower price, may be granted;
  
  c) you must have performed your obligations;
  
  
• if instead you wish to maintain your contract, it is possible to ask for your side of the contract to be made easier. The law allows this when the co-contractor fails to perform his obligations. For example, suppose you rent a truck for your company. When you arrive to pick it up, all they have is a car. You need a vehicle right away, so you take the car. You can ask for the price to be reduced because a car isn’t what you agreed on;
  
  
• you can claim money for harm and inconvenience that you have suffered. You can ask for this by itself if you do not want your contract performed or cancelled. But you can also combine a request for money damages with any of the other options mentioned above.

By law, you can refuse to pay or perform any other obligation as long as the contracting party fails to properly fulfill her side of the agreement, or fails to offer to do so.

But be careful. This rule only applies when you’re not bound to perform your obligations first. It is best to get informed before you stop performing your side of the bargain.

As soon as you notice that a contracting party is defaulting on its obligations, you have an obligation to minimize the harm done to you. This means that you must do what you can to improve your situation and prevent the damage from getting any worse.

The courts are stern with people who seek damages (payment) for harm that could have been avoided with a little care. As an example, if your employer fails to respect your employment contract, you must minimize the harm by making reasonable efforts to find a new job and to consider accepting reasonable job offers.