Bill 96's "French First" rule takes effect: Implications for contracts of adhesion in Québec

As discussed in our previous article on Bill 96, effective June 1, 2023 section 55 of Québec's Charter of the French Language (the "Charter") will introduce a "French First" rule for contracts of adhesion – i.e. contracts in which the essential stipulations are non-negotiable and were imposed or drawn up by one of the parties, on its behalf or upon its instructions^[1] – which has significant implications for businesses operating in Québec.

 

While under the previous section 55, "contracts pre-determined by one party" (i.e. adhesion contracts) and "contracts containing printed standard clauses" could be drafted in a language other than French "at the express wish of the parties", the amended section 55 introduces new transformative requirements.

Section 55 now provides that the parties to an adhesion contract may only be bound by the English (or non-French) version of the agreement if a French version was "remitted" to the adhering party prior to the parties expressing their wish to be bound by the English version. Section 55 further clarifies that the French version of the agreement must have "been given to the other party" and that the adhering party must have "explicitly expressed willingness" to conclude an English version of the agreement.

As such, the prevalent practice by which parties would insert a 'language selection' clause in adhesion contracts will no longer suffice. Instead, businesses subject to the Charter will be required to adopt a two-step process in order to conclude contracts of adhesion in English:

• Step 1: A completed French version of the agreement will have to be remitted to the consumer or adhering party; and
• Step 2: Only once Step 1 has been completed, the parties must "explicitly express their willingness" to proceed in English.

In practice, businesses are advised to establish streamlined processes to ensure that the French version of a contract of adhesion is given to the adhering party prior to contracting in English. Such agreements may include website Terms & Conditions, contest entry forms, contest rules, as well as Terms of Sale and subscription agreements.

Furthermore, businesses should conduct a comprehensive review of their existing agreements to evaluate and update language selection clauses so as to capture the parties' explicit and express consent to transact in English, and acknowledge that a French version of the agreement was provided.

By implementing these measures, businesses can demonstrate their commitment to meeting the requirements of section 55 (as amended by Bill 96) and ensuring that both parties have access to the contract in the language of their choice, thereby fostering transparency and compliance. Bill 96 also provides that where the "French First" rule applies, no payment whatsoever may be claimed in association with the drafting of the French version of an adhesion contract or any documents related thereto.

Note that section 55 now only governs adhesion contracts and will therefore no longer apply to "contracts containing printed standard clauses." In the absence of any regulatory guidelines regarding the implications of these change, it is unclear whether contracts comprising standard boilerplate language, with negotiable essential elements, would be exempt from the requirements set out above. The determination of which agreements may be characterized as adhesion contracts, a subject that has been debated before Québec courts, lacks clarity in certain circumstances. As a result, businesses may face uncertainties regarding their obligations and the necessary steps to comply with section 55 of the Charter, particularly concerning the necessary measures to be taken by e-commerce retailers and merchants. One specific challenge arises when considering the ability for customers to toggle between English and French versions of an e-commerce site, as this alone may not suffice to fulfill the obligation of providing a French version of the merchant's Terms of Sale. Instead, query whether the French version of the Terms of Sale would need to be automatically presented to the customer in the first instance, with the option to either agree to the French version or click-to-access and agree to the English version. However, it is important to acknowledge that such an approach would pose significant obstacles from a development perspective and may introduce additional friction to the online purchase flow.

It should also be noted that certain types of adhesion contracts benefit from a partial exemption to the above. These include:

• Loan contracts;
• Financial agreements and instruments whose purpose involve financial risk management – including but not limited to, currency exchange or interest rate agreements, call and put option agreements and forward contracts;
• Contracts used in relations with persons outside Québec;
• Contracts concluded with a person or business that carries out the activities of a clearing house;
• Contracts concluded on a platform that allows the negotiation of a derivative as per the Derivatives Act, a security as per the Securities Act, or other movable property, on condition that, in the latter case, the contract is not a consumer contract; and
• Insurance policies, where no French equivalent exists and the policy meets one of the following criteria: (a) it originates from outside Québec; or (b) its use is not widespread in Québec.

These contracts must be in French, unless it is the express wish of the parties to transact in English – i.e. they are exempt from the requirement to remit a French version of the agreement, but remain subject to the requirement whereby the parties must have "explicitly expressed their willingness" to contract in English.

Bill 96 also notably amends Québec's Consumer Protection Act by requiring that certain consumer agreements (e.g. itinerant merchant agreements, contracts of credit excluding contracts for the loan of money payable on demand, contracts involving sequential performance for a service provided at a distance, etc.) follow the two-step process described above.

Québec's Bill 96 and its French First rule for contracts of adhesion represent a significant shift in the legal landscape for businesses operating in the province. While the specific implications and guidelines for compliance are yet to be fully clarified, it is crucial for businesses to stay informed, seek legal counsel, and proactively adapt their practices to meet these new requirements. By prioritizing the use of French, revising language selection clauses, and ensuring the provision of a French version of agreements, businesses can not only comply with the law but also foster stronger connections with customers, and demonstrate cultural sensitivity.

In light of the significant impact on businesses operating in Québec, we recommend consulting your Gowling WLG Advertising, Marketing and Product Regulatory and Gowling WLG Corporate Commercial counsel to discuss the concrete steps to be taken to mitigate risks and ensure compliance.

Gowling WLG is monitoring the developments of Bill 96, as well as any future guidelines or draft regulations in respect thereof, and will provide further updates as this legislation continues to unfold.

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