Legal definition of “obligations”

This article must not be viewed as a legal opinion or any form of legal representation made by the author in connection with the subject matter discussed herein. Before entering into any type of commercial or private agreement, we advise that you consult with a competent legal advisor in the applicable jurisdiction to receive an accurate representation and opinion on the legal consequences taking into consideration the pertinent facts surrounding your request.

Many of us wake up in the morning and possibly use the public transportation to get to work for a full day of intensive labour, buy a cup of coffee on our way there and stop by the grocery store to purchase some groceries before heading back home. The fact of the matter is that in this example, we have entered into at least four different contracts that may be classified as transportation, labour and purchase contracts. We enter into numerous contracts on a regular basis, sometimes without even being aware of its formation, execution and extinction. The simplicity in entering into contractual relationships is a central element in the efficient functioning of our society and relationship among people providing the flexibility needed to customize every contractual provision and a legal support in its enforcement. It is in the nature of every contract to entitle the parties thereto to specific rights and impose upon the same specific obligations.

A contract is defined to be a bilateral juridical act consisting of a consensual agreement among two or several persons obligating the parties thereto to execute a certain prestation. Two conditions are necessary in the formation of a contract, the creation of legal obligations enforceable by law driven by an economic interest at the core such obligation.

In this essay, we shall consider and define the notion of “obligations” to better understand the mechanics and characteristics underlying any contractual relationship. The term obligation is most commonly used and defined to be a duty or constraint; however, in legal terms, obligation refers to the legal relationship among two or several persons requiring the accomplishment of a certain prestation as its objective. In essence, there are three components to any obligation: (1) juridical relationships (2) among legal persons (3) and patrimonial in nature.

First, by juridical relationship, it is understood that there are opposing parties to any obligation whereby such obligation can be legally enforced and sanctioned by the judicial system in the event of one party’s non-execution. To be legally enforceable, an obligation or civil obligation must be based on either the text of law or terms of a juridical act. Upon determination of the existence thereof, the judicial system or courts will ensure that the debtor fully, completely and in a timely manner satisfies and executes his or her obligation towards the creditor of such obligation.

Furthermore, an obligation must be among legal persons as prescribed by the Civil Code of Quebec who may be a physical persons or a moral person including the State and all public bodies and each party may be a creditor and a debtor simultaneously or just one or another. The objective of any legal obligation is the prestation entitling the creditor to demand its execution and obligating the debtor to execute such prestation. Ultimately, when such obligations are based on a juridical act, we refer to this act as a “contract”.

Last, obligations must be patrimonial in nature defined to be all assets, real and personal rights, and liabilities or debts of a legal person. Moreover, a legal person cannot sell, assign or transfer its patrimony but may sell, assign or transfer the assets and liabilities constituting such legal person’s patrimony. It is only upon a physical person’s death or moral person’s dissolution that the patrimony shall be assigned to the heirs or successors extinguishing completely the patrimony. Extra-patrimonial rights are one type of assets that may be found in a patrimony, having no quantifiable economic value such as the right to one’s image or dignity. We may also encounter personal rights to refer to certain rights that can only be exercised by a specific person such as the entitlement to alimony by a spouse upon divorce.

Contracts are essential to the development and evolution of the collectivity and must provide as much as freedom as possible to the market players, but within certain legal parameters, to negotiate and define each other’s rights and impose obligations on one another. The judicial system must help protect the institution of contracts in enforcing as strictly as possible the contractual terms as defined by the parties, subject to abuse and actions contravening the public order. With hundreds of thousands of contracts entered into on a daily basis, maintaining the market participant’s confidence in this institution is thus paramount and must be preserved at all times.