Regulated contracts: Quebec Court of Appeal confirms applicable laws and regulations of public order are not external clauses

Publication | February 2015

On January 29, 2015,1 the Supreme Court of Canada dismissed an application for leave to appeal a Quebec Court of Appeal decision, dated May 30, 2014,2 upholding a Superior Court decision3 dismissing a claim for $13.5 million presented by a player of the Super 7 lottery who asserted he had won the jackpot in the May 23, 2008, draw.


Facts

On May 23, 2008, just before 9 p.m., the appellant went to an authorized Loto-Québec dealer and asked the clerk if he still had time to buy Super 7 lottery tickets for that evening's draw. After the clerk answered in the affirmative, saying  he had to hurry, the appellant bought two "Quick Pick" tickets with one "Extra." The first ticket printed by the terminal was dated for the May 23, 2008, draw. A few seconds later, the terminal printed out a second ticket bearing the date of the following week’s draw, May 30, 2008. The clerk asked the appellant if he nonetheless wanted the second ticket and the appellant decided to keep it.

As chance would have it, the number on the ticket for the May 30 draw matched the winning combination of numbers for the May 23 draw. Convinced he had the winning ticket because his request was made before 9 p.m., the appellant approached Loto-Québec to claim the jackpot. Loto-Québec refused to pay the appellant the amount claimed on the grounds that he did not hold a valid winning ticket under the applicable regulations, namely the By-law respecting forecast contests and numbers games4 (the By-law).

In support of his application, the appellant claimed Loto-Québec advertising contained all the essential elements of a gaming contract and therefore constituted an offer to contract. Thus, according to the appellant, the contract was formed when he accepted the offer, namely when the data for the request he made before 9 p.m. was entered, and consequently Loto-Québec had an obligation to issue him two tickets for the May 23, 2008, draw. The appellant further maintained that the clause on the back of the ticket referring to the By-law was not enforceable against him pursuant to articles 1435 to 1437 of the Civil Code of Québec (CCQ) because, according to him, it had not been brought to his attention before the contract was formed and the rules of the gaming contract arising from it are incomprehensible to the adhering party as well as excessive.

Decisions

Regarding his first argument, the Superior Court held that Loto-Québec advertising did not constitute an invitation to contract because it did not contain all the essential elements for entering into the contract – in this instance, the selection of the combination of numbers, the amount at stake and the date of the draw. The appellant's request therefore constituted the offer, which Loto-Québec had accepted, when the appellant's request was recorded in its central computer, seven seconds after the 9 p.m. deadline. The Superior Court therefore held that the contract had been formed for the following week's draw.

Contrary to the Superior Court, the Court of Appeal was of the view that Loto-Québec advertising contained all the essential elements of the gaming contract, and hence constituted an offer. The contract was therefore formed when Loto-Québec received the appellant's acceptance. After consideration of the relevant provisions of the applicable By-law, the Court of Appeal held that the contract for the second ticket was formed after 9 p.m., when the appellant's acceptance was recorded in the central computer. Loto-Québec was therefore correct in rejecting the appellant's claim because he was not the holder of a valid winning ticket for the May 23, 2008, draw. The Court of Appeal also upheld the Superior Court's finding that the combination of numbers on the ticket bearing the May 30, 2008, draw date would have been different had the ticket indicated a May 23, 2008, draw date.

As for the appellant's second argument, the Superior Court held that the clause on the back of the ticket referring to the By-law was an external clause, but that disclosure was sufficient to be enforceable against the appellant. The Court of Appeal disagreed and held that the law and regulations of public order applicable to regulated contracts such as gaming contracts form part of the implied contractual obligations pursuant to article 1434 CCQ and therefore cannot be regarded as external clauses, even if they concern a contract of adhesion. Therefore, the By-law governing the gaming contract entered into between the appellant and Loto-Québec did not constitute an external clause.

By adopting this position regarding the enforceability of the law and regulations, the Court of Appeal has settled a debate among legal commentators and clarified the law on regulated contracts. There is no longer any doubt that in a regulated contract, the law and regulations of public order are enforceable against the person who adheres to the contract, without it being necessary to prove that the person was made aware of them prior to entering into the contract.

Footnotes

1 Ifergan v Société des loteries du Québec, application for leave to appeal dismissed (36023): January 29, 2015.

2 Ifergan c Société des loteries du Québec, 2014 QCCA 1114, Thibault, Doyon and Dutil, JJ.

3 Ifergan c Société des loteries du Québec, 2012 QCCS 5600, Lalande, J.

4 RRQ, c. S-13.1, r 1.


Contacts

Dominic Dupoy

Dominic Dupoy

Montréal