In a decision rendered today (Resolute FP Canada Inc. v. Hydro-Québec, 2020 SCC 43), the Supreme Court of Canada rules for the first time on the legal framework applicable to the assignment of contract in Quebec law, and establishes the conditions under which the assignment may be set up against the assigned party.

Although assignment of contract is a legal transaction and business technique commonly used by legal practitioners and their clients, it remained until now an ill-defined legal concept and a source of uncertainty. With this decision, the Supreme Court confirms the possibility for a contracting party to assign all the rights and obligations arising from a contract. The Supreme Court adds that this agreement may be given in advance (for example, in the terms of the contract that is the subject of the assignment), provided that the contracting party is informed of the assignment when it occurs.

The Supreme Court's analysis rests in part on its conclusion that a contract may be considered as a patrimonial asset that may be subject to assignment, which is a novelty under Quebec civil law. In this regard, the Supreme Court highlights the malleable nature of the assignment of contract, which allows it to adapt to the commercial reality of the parties, including the fact that the assignment may be temporary — which distinguishes it from the notion of sale, the effect of which is necessarily permanent.

Considering the frequency with which assignments of contracts occur in practice in modern economic life, this decision provides clarifications that will certainly be of great assistance to legal practitioners and companies doing business in Quebec.

M^tre Dominique Ménard, M^tre Max R. Bernard and M^tre Nicolas Roche represented Hydro-Québec before the Supreme Court. In first instance, the case was argued by M^tre Jean-Olivier Tremblay, head of Legal Affairs – Regulated Activities at Hydro-Québec.