General Partnership Agreement (SENC) — Quebec

A Quebec General Partnership Agreement (Contrat de société en nom collectif or SENC) is a contract governed by articles 2186 to 2235 of the Code civil du Québec (CCQ) by which two or more persons agree, in a spirit of collaboration, to carry on an activity together, to contribute to it by pooling property, knowledge, or activities, and to share the resulting pecuniary gains between them. The SENC is one of the most traditional and widely used business structures in Quebec, particularly among professionals, tradespeople, and small business partners.

The Code civil du Québec defines the concept of société (partnership) in article 2186 as a fundamentally collaborative relationship. Unlike the common law concept of partnership found in other Canadian provinces, the Quebec SENC is entirely governed by the CCQ rather than a separate partnership act. This means that the general principles of Quebec obligations law, including the overriding obligation of bonne foi (good faith) under article 1375 CCQ, apply directly to the partnership relationship.

One of the most significant characteristics of a SENC is the solidarité (joint and several liability) of the partners toward third parties, as established by article 2221 CCQ. Each partner is personally and solidarily liable for all the debts and obligations of the partnership, meaning a creditor can pursue any single partner for the full amount of a partnership debt, regardless of that partner’s share in the partnership. The partner who pays more than their proportionate share has a recourse in repetition (right of recovery) against the other partners under article 2224 CCQ.

The SENC must be registered with the Registraire des entreprises du Québec under the Loi sur la publicité légale des entreprises (RLRQ, chapter P-44.1), which requires the filing of a déclaration d’immatriculation containing the partnership’s name, address, object, and the names and addresses of all partners.

When two or more individuals wish to carry on a business together in Quebec and prefer the flexibility and simplicity of a partnership structure over a corporation, allowing them to share profits and losses directly and pool their respective skills, property, and knowledge to achieve a common commercial objective.

When professionals in Quebec such as accountants, architects, engineers, or consultants wish to practice together under a shared name while maintaining the collaborative structure that the CCQ’s partnership provisions support, including the right of each partner to participate in management under article 2215 CCQ.

When business partners need a formal written agreement to clarify their respective capital contributions (mises de fonds), profit-sharing percentages, management authority, and withdrawal procedures, rather than relying on the default rules of the CCQ which may not reflect their actual intentions.

When partners wish to establish clear rules for the admission of new partners, the withdrawal or expulsion of existing partners, and the consequences of a partner’s death, disability, or bankruptcy, including how the departing partner’s share will be valued and paid out in Canadian dollars.

When Quebec business partners need to define the circumstances under which the partnership will be dissolved and liquidated, in accordance with articles 2230 to 2235 CCQ, and to designate a liquidation process that protects the interests of all partners and creditors.

Without a written partnership agreement, the default rules of the Code civil du Québec apply, which provide for equal sharing of profits and losses regardless of capital contributions, joint management by all partners, and dissolution provisions that may not align with the partners’ commercial objectives.

Parties in Quebec should prepare a General Partnership Agreement (SENC) — Quebec proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

Constitution and Dénomination — The formal establishment of the partnership under article 2186 CCQ, including the partnership name (raison sociale), principal place of business (siège), and the collaborative purpose that defines the partnership relationship.

Mise de Fonds and Capital Contributions — Each partner’s initial capital contribution in Canadian dollars, as well as the mechanism for additional contributions. Under article 2198 CCQ, each partner is a debtor toward the partnership for everything they have promised to contribute.

Répartition des Bénéfices et des Pertes — The percentage allocation of profits and losses among the partners. Articles 2201 and 2202 CCQ provide default rules (proportional to contributions), but partners may agree on different allocations in their written agreement.

Administration de la Société — How the partnership is managed day-to-day, whether jointly by all partners or through a designated managing partner (associé gérant). Under article 2215 CCQ, each partner may bind the partnership in the ordinary course of business unless otherwise agreed.

Solidarité Envers les Tiers — The joint and several liability of all partners for partnership obligations toward third parties under article 2221 CCQ. This is a fundamental and non-waivable characteristic of the SENC that cannot be contracted away as against third parties.

Retrait et Admission — The conditions under which a partner may withdraw from the partnership or a new partner may be admitted. Article 2228 CCQ allows a partner in an indefinite-term partnership to withdraw by giving reasonable notice. The agreement should specify the valuation method and payment terms for the departing partner’s share.

Dissolution et Liquidation — The circumstances triggering dissolution under articles 2230 to 2235 CCQ (unanimous consent, expiry of term, court order, or unilateral withdrawal with notice), and the liquidation process under articles 2264 and following CCQ.

Immatriculation — The obligation to register with the Registraire des entreprises du Québec under the Loi sur la publicité légale des entreprises, including the filing of the déclaration d’immatriculation and any required updates.

Bonne Foi — The overriding obligation of good faith under article 1375 CCQ that applies to all aspects of the partnership relationship, requiring partners to act honestly, loyally, and transparently in their dealings with each other.