In Quebec, it is not always necessary for an agreement to be in writing in order to bind the people who have entered into it.
Mr. Durand (fictitious name) arrived in Quebec a few weeks ago. He buys a car and calls his damage insurance broker to ask about the price of car insurance. After several quotes, he chooses one of the policies offered and tells the broker that he agrees. Mr. Smith provides his bank account information and verbally authorizes the broker to proceed with the debit.
After hanging up, Mr. Smith wonders if he is really protected while driving his car. He has no proof of insurance in his hands, and after all, he hasn't signed any papers... Can he drive his car without risk?
Yes, because he has entered into a verbal contract.
In Quebec, a contract is an agreement of will between two or more persons. Under the Civil Code of Quebec, a contract is formed by the mere exchange of consent between persons capable of contracting. Certain types of contracts require a particular form, i.e. in writing or with other additional formalities. This is the case, among others, for a marriage contract, a life insurance contract, a constitution of a mortgage (etc.).
In property and casualty insurance, a verbal contract is as valid as a written contract and is equally binding on the contracting parties, provided that it can be proven. For this reason, and in order to be able to serve their clients immediately, many insurance companies and brokerage firms are equipped with telephone systems capable of recording conversations.
The advantage? Even if documents are sent home only a few days later, a simple call to your broker at the dealership and you could be driving with the security of being well insured!
To Keep in Mind
- Just because you're on the phone doesn't mean your words are worthless! If you're not sure, don't hesitate to clarify the situation beyond any doubt so you can hang up with peace of mind.
- Your broker is there to help you deal with your new situation: on the phone or on site, don't hesitate to ask your questions!