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Consumer contracts: Consumer Protection Laws

Region: Ontario Answer # 811

What is a consumer contract?

There are several types of consumer contracts. Some examples are door-to-door sales (direct agreements), prepaid membership agreements, buying goods over the Internet, or purchasing goods at the seller’s place of business. Basic contract law requires that:

  1. The parties intend to make a contract,
  2. There is an offer and acceptance, and
  3. There is consideration, which means the parties each receive something of value (e.g. the company receives payment and the consumer receives goods or services).

The contract can be in writing or oral.  For significant purchases, it is always best to have a written agreement, since it is easier to prove what was promised. Generally, the rights of consumers hinge on the “conditions” (essential terms) and “warranties” (promises) of a contract of sale. The conditions of a contract are quite different from the warranties. A breach of a condition, such as changing the contracted price or selling goods without proper ownership rights, is a serious infringement of a sales contract, and makes it “void” in the eyes of the law. The consumer can refuse to go through with the deal, ask for a refund, or demand a replacement product, since the contract is not enforceable.

 

What is a warranty?

By contrast, a warranty is a representation or promise by the seller which you relied on, such as a promise that a product is this year’s model and not last year’s. A breach of a warranty must only be remedied or fixed by the seller (usually at no cost to the consumer), but does not necessarily destroy the contract and your obligation to accept and pay for the goods once repaired.

What if a salesperson made promises you relied on that are not in writing? The consumer protection law says oral statements of a salesperson that are relied upon by the consumer can be considered enforceable “warranties” in a sales contract. In other words, a business will have to honour those promises or provide some form of remedy. Although such promises are legally part of the contract, the problem is proving it. Statements or representations by salespeople should always be in writing to ensure that what you think you are getting is correct, so that if the seller does not live up to their promise, you can prove that fact.

Also, the law is clear that businesses are responsible for any statement a salesperson makes while acting within the scope of his or her actual, usual or apparent authority. In court, the onus will be on the supplier to prove that the salesperson was acting outside the scope of his or her authority. Finally, it is worth noting that a seller is also responsible for statements or promises that a manufacturer or distributor makes on packaging, signs or documents accompanying the product.

Two laws that protect consumers in Ontario are The Consumer Protection Act, 2002, and the Sale of Goods Act.

The Consumer Protection Act, 2002

The Consumer Protection Act, 2002, (the “Act“) sets out rules about information that must be contained in certain consumer contracts for them to be valid. For example, a contract that involves payments to be made later must contain the seller’s name and address, a description of the goods or services that are being sold, the amount of the purchase, and details of any installment payments to be made. If this information is not on the contract, the contract is not valid and cannot be enforced by the seller.

Common types of consumer agreements found under the Act include direct agreements, personal development services agreements, and Internet agreements.

Direct agreements & door-to-door sales and services

For certain consumer contracts, the law also provides a “cooling off” period. Direct sales contracts, or direct agreements as they are known under the Act, are those made at a location other than the seller’s principal place of business. This includes door-to-door sales contracts for consumer goods and services such as snow shovelling or lawn care.

If you have signed a direct agreement for something you bought in your home that costs more than $50, the Act states you have 10 days to cancel it without having to provide a reason. You must make sure that the seller receives the cancellation in writing, and within the time period. If you have cancelled in this way, any money you have paid to the seller must be returned to you.

Unsolicited door-to-door sales banned for certain household goods and services

As of March 1, 2018 changes were made to the Consumer Protection Act which affect goods and services sold door-to-door. If a consumer signed a contract made through a door-to-door sale after March 1, 2018 for one of the restricted products or services, the agreement is not legally binding and is considered void. In addition, the consumer is permitted to keep the product or service without any obligation to pay for it.

However, there is an exception to this rule if the consumer contacted the business and arranged to meet in their home for the purpose of entering into an agreement to buy or lease one of the products or services specified in the new rule. In those circumstances, any agreement made would be legal and binding. For more information refer to topic #807 Direct sales agreements and door-to-door sales.

Personal development services agreements

The Consumer Protection Act also applies to personal development services agreements (sometimes referred to as prepaid services) in which there is an agreement in writing and the consumer is required to pay for the service in advance.

Personal development services covered under the Act are:

  • training, advice or instruction in areas like health, fitness, weight loss and nutrition (e.g. gym membership agreements)
  • modelling and talent services, including related photo shoots
  • facilities for, or instruction in, martial arts, sports, dance or similar activities

A consumer may, without any reason, cancel a personal development services agreement at any time within 10 days after the later of receiving the written copy of the agreement and the day all the services are available. For more information, refer to 816 Prepaid services.

Internet-based agreements

For Internet-based agreements, the Act requires businesses to deliver a copy of the written contract within 15 days of entering into it.  If the business fails to deliver a copy of the contract within that time the purchaser has 30 days, from the date the contract was made, to cancel it. Internet agreements must have specific details, including a fair and accurate description of the goods and services, detailed pricing, the applicable currency, payment terms, manner of delivery, rights of cancellation, exchanges, refunds or trade-ins, and any other restrictions. The Act also requires that services sold over the Internet must be of “reasonably acceptable quality” — a first among consumer protection laws in Canada.

Other types of consumer contracts under the Consumer Protection Act

Other consumer agreements subject to rules and regulations under the Consumer Protection Act include:

Future performance agreements: for goods and services the consumer must wait to receive because the delivery date is in the future; such as for maintenance on an item, or installing Internet services.

Time share agreements: in which the consumer is given the right to use a property for a period of time.

Remote agreements: for goods and services offered over the phone or through the mail (e.g. newspaper subscriptions, cable TV subscriptions).

Reward point programs: applies to all consumer agreements under which reward points are provided.

For more information on your rights and obligations regarding these and other agreements view the Consumer Protection Act, or visit ontario.ca.

Sale of Goods Act

Another law which protects consumers is the Sale of Goods Act, which contains rules setting out conditions and warranties which apply to all sales of goods to consumers. One condition is that the goods you receive must match the description of the goods you bought. For example, the Sale of Goods Act applies to a consumer’s purchase of furniture, where the items delivered by the store are quite different from the ones presented in the showroom when the sale was made. You can refuse to accept such goods, and demand that your money be refunded to you. If you have already accepted goods which turn out to be seriously defective, you may be entitled to receive a portion of your money back.

There are also rules under the Consumer Protection Act, 2002 which protect consumers who have been the victims of misrepresentations or unfair business practices by sellers. To make a complaint about unfair business practices refer to topic #813 Making consumer complaints.

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4Pillars Consumer Ontario All Topics May 20184Pillars Consumer Ontario All Topics May 2018

 



								

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