A Quebec Loan Agreement (Contrat de prêt) is a legal contract governed by articles 2312 to 2332 of the Code civil du Québec (CCQ) by which one person (the prêteur or lender) advances a sum of money to another person (the emprunteur or borrower), who undertakes to repay the same amount, with or without interest, within an agreed timeframe. The CCQ classifies loans into two categories: the prêt à usage (loan for use, articles 2313-2326), which involves lending a specific thing for temporary use, and the simple prêt (articles 2327-2332), which covers the lending of money or consumable things.

The Quebec loan agreement operates within a civil law framework fundamentally different from the common law approach used in other Canadian provinces. Under the CCQ, the simple prêt of money is governed by specific rules on interest (article 2330), which state that the stipulation of interest obliges the debtor to pay them and that, in the absence of a specified rate, the legal rate applies. Article 2332 CCQ provides a distinctive protection against lésion (unfairness or exploitation): a court may declare the loan contract null, reduce the borrower's obligations, or revise the terms of performance if it finds lésion having regard to the risk and all circumstances.

The overriding obligation of bonne foi (good faith) under article 1375 CCQ applies to all aspects of the loan relationship, from negotiation through repayment. This means both the lender and borrower must exercise their rights honestly and without abusing their contractual powers. Additionally, the federal Interest Act (R.S.C. 1985, c. I-15) requires interest rates to be expressed as annual rates (section 4), and the Criminal Code (R.S.C. 1985, c. C-46, section 347) prohibits effective annual interest rates exceeding 35% per annum (as amended in 2025), including all fees and charges. The Loi sur la protection du consommateur (RLRQ, chapter P-40.1) provides additional mandatory protections for consumer loans made by commercial lenders.

When one individual in Quebec lends money to another individual (a private loan between friends, family members, or acquaintances) and both parties wish to formalize the terms of the loan in writing, including the principal amount, interest rate, repayment schedule, and consequences of default, to avoid misunderstandings and to create an enforceable legal document.

When a Quebec business advances funds to another business or individual and needs a loan agreement that complies with the Code civil du Québec's specific requirements for simple prêt, including the mandatory disclosure of the interest rate as an annual rate under the federal Interest Act and compliance with Criminal Code section 347.

When a borrower in Quebec needs to provide security (sûreté) for a loan, such as a hypothèque mobiliere on movable property, and the parties need to document the security arrangement for registration at the Registre des droits personnels et réels mobiliers (RDPRM) under articles 2934 and following of the CCQ.

When parties wish to establish clear terms for prepayment of the loan, including whether prepayment is permitted, any applicable penalties, and the notice period required, to avoid disputes about early repayment.

When a lender wishes to protect against the borrower's potential default by specifying the events of default, the grace period, the default interest rate, and the remedies available to the lender, including the right to demand immediate repayment of the entire outstanding balance (déchéance du terme).

Without a written loan agreement, the parties must rely on the default rules of the CCQ, which may create uncertainty about the interest rate, repayment terms, and the lender's remedies in case of default. The absence of written documentation also makes it more difficult to prove the existence and terms of the loan in court.

Montant et Objet du Prêt — The principal amount of the loan in Canadian dollars (CAD), the date of advance, and the stated purpose for which the funds will be used. Under article 2314 CCQ, the simple prêt transfers ownership of the money to the borrower, who must return the same amount.

Taux d'Intérêt — The annual interest rate, the calculation method (simple or compound), and compliance with the federal Interest Act (which requires expression as an annual rate) and Criminal Code section 347 (which prohibits effective annual rates exceeding 35%). Under article 2330 CCQ, the stipulation of interest obliges the borrower to pay them.

Calendrier de Remboursement — The repayment schedule specifying whether repayment is in a single lump sum at maturity, in equal monthly installments of principal and interest, or as interest-only payments with principal due at maturity. Payments are applied first to accrued interest, then to principal, per article 1570 CCQ.

Remboursement Anticipé — Whether the borrower may prepay the loan in whole or in part before the maturity date, any applicable prepayment penalty, and the required notice period. For consumer loans under the Loi sur la protection du consommateur, prepayment without penalty is a mandatory right.

Sûreté (Security) — If the loan is secured, a description of the collateral and the obligation to register the security at the Registre des droits personnels et réels mobiliers (RDPRM) under articles 2934 and following of the CCQ. Quebec's security regime (hypothèque mobiliere) differs significantly from common law pledges and security interests.

Défaut et Recours — The events constituting default (missed payments, bankruptcy, false declarations, breach of material obligations), the grace period, the default interest rate, and the lender's remedies including the right to demand immediate repayment of the entire balance (déchéance du terme) after written mise en demeure (formal demand) under article 1594 CCQ.

Lésion Protection — Article 2332 CCQ allows a court to declare the contract null, reduce the borrower's obligations, or revise the terms if it finds lésion, taking into account the risk and all circumstances. This is a uniquely Quebec civil law protection against unfair lending practices.

Bonne Foi — Article 1375 CCQ requires both the lender and borrower to exercise their rights and perform their obligations in good faith. The lender must not exercise remedies abusively, and the borrower must honor repayment obligations diligently.