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Period of Grace

The term “period of grace,” more commonly written as “grace period” outside of the Civil Code of Québec (“CCQ”), is used in Book Five of the CCQ governing obligations, specifically in the section on the right to enforce performance,[1] and on compensation.[2] A “grace period” is extra time granted to the debtor, by the court or by the creditor, “without incurring the usual penalty for being late,”[3] when the term has already passed; the debtor has more time to perform the obligation, but the term remains expired.[4] A period of grace therefore does not prevent compensation[5], and the debtor “remains liable for injury resulting from delay in the performance of the obligation from the moment he begins to be in default.”[6]

It is therefore important to differentiate the grace period from prorogation, which fixes a new term at a later date, preventing compensation.[7] The “period of grace” is also often equated to the judicial term,[8] a suspensive term that the judge grants the debtor to allow him or her to perform his or her obligations after the term has passed. However, not all judicial terms are “periods of grace”. Indeed, the suspensive term set by the judge could simply be a new later term, or he or she could set a term where one had not been set at all.[9] A “period of grace” must be distinguished from the suspensive term, to which the exigibility of a right is subordinated.[10] Although both terms seem similar because the debtor is granted a certain amount of time to perform, the “period of grace” does not produce all the effects of the suspensive condition. The “period of grace” simply delays the creditor’s recourses to force the execution of the obligation and the obligation remains exigible even after the debtor is granted a “period of grace”. This is unlike the suspensive term where the obligation is not exigible until the term expires.[11]

[1] Art 1600 CCQ.

[2] Art 1675 CCQ.

[3] Bryan A. Garner et al, eds, Black’s Law Dictionary, 9th ed (St. Paul, Minn: Thomson Reuters, 2009) sub verbo “grace period”.

[4] Jean-Louis Baudouin, Pierre-Gabriel Jobin & Nathalie Vézina, Les obligations, 7thed (Cowansville, Que: Yvon Blais, 2013) at para 1064 [Baudouin & Jobin].

[5] Compensation refers to the extinguishment of reciprocal debts and obligations (art 1672 CCQ).

[6] Art 1600 CCQ.

[7] Baudouin & Jobin, supra note 4.

[8] France Allard et al, eds, Private Law Dictionary and Bilingual Lexicons: Obligations (Cowansville, Que: Yvon Blais, 2003) sub verbo “judicial term” [Allard].

[9] Arts 1510, 1512 CCQ.

[10] Allard, supra note 8 sub verbo “suspensive term”.

[11] Ibid.