Area of Law: Consumer Law
Answer # 807
Direct sales agreements & door-to-door salesRegion: Ontario Answer # 807
Under the Ontario Consumer Protection Act, purchasers of products or services, bought through a direct agreement, are given certain rights to cancel the agreement. Under the Act, direct agreements are those which are negotiated and entered into in person, at a place other than the supplier’s place of business, such as at the purchaser’s home (also known as door-to-door sales agreements). The agreement can be for such products or services as water heaters, lawn care, snow removal and home renovations, or any product or service purchased at home from a door-to-door salesperson.
Right to cancel within 10 days – cooling-off period
You can generally cancel a direct agreement without any reason, by giving notice of cancellation to the seller within 10 days of receiving a copy of the signed contract. Also known as a “cooling-off” period, this 10-day cancellation period is only available if the item purchased was worth over $50, there is a written agreement or contract, and you either did not pay for the item in full, or did not receive all the goods and services when you signed.
The notice to cancel must be provided in writing by email, registered letter or by hand delivering it. Be sure to keep a copy of your letter. The company has 15 days to return your money and is responsible for picking up the product or paying for its return if they want it back.
Right to cancel because of missing information
If the 10-day cancellation period has expired, you still may be able to cancel the agreement within one year of signing it, if you did not receive a copy of the agreement, or it does not contain the necessary information. In addition to the name and address of the buyer and seller, the agreement must clearly describe the item or services purchased, a detailed description of the payment terms and any guarantees, delivery dates, delivery charges and the date on which services are to be performed and completed. If it doesn’t, you can cancel the agreement, and the company must provide a full refund.
The company may be exempt from having to refund the full amount of the agreement price if the buyer requested the services to be performed within the 10-day period. In this case, the supplier is entitled to deduct reasonable compensation from the refund amount. The exception was intended to give some protection to the supplier of emergency services, such as emergency home repairs.
Right to cancel because of unfair business practices
You may also be able to cancel the agreement, in writing, within one year from the date you signed it, if an “unfair practice” led you to purchase the product or service. Under the law, an unfair practice can include a number of behaviours including, a seller making false or misleading statements, such as stating that something you own requires servicing or replacing if it does not, saying goods are new when they are not, or stating that the product or service is better than it really is.
Unfair practices can also include situations where a seller takes advantage of a buyer’s reading problems, language difficulties, or mental or physical disabilities. This also includes excessive sales pressure and charging an excessively high price.
In addition, with direct agreement purchases, the final price cannot be more than 10% above the estimate, unless you agree. Also, there is a minimum warranty about the quality of services. If they are not reasonably acceptable, you can file a complaint with the Ministry of Government and Consumer Services.
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 products or services listed below, 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.
The new rules apply to the door-to-door purchase of:
- air conditioners
- air cleaners
- air purifiers
- water heaters
- water treatment devices
- water purifiers
- water filters
- water softeners
- duct cleaning services
- bundles of these goods and services
Other important rules under the Act include:
- Consumers can invite a business to their home and any contract under such circumstances is valid and is subject to the 10-day cooling off period.
- If a consumer calls for repairs, maintenance, an energy assessment, or any reason other than entering into a contract for one of the restricted items, the business can only perform the work that they were requested to do and cannot enter into a new contract for the sale of a restricted goods. The business is permitted, however, to leave information about the products and services they offer.
- If a consumer already has a written contract in place with a business, the business is permitted to contact the consumer by phone, schedule a visit upon the consumer’s request, and enter into a new contract. However, if the business plans to offer the consumer one of the restricted products and services, they must inform them of this fact before visiting the consumer’s home. Also, prior to making an offer or presentation to the consumer, the business must get the consumer’s approval to hear their offer.
- Retail businesses must keep records regarding new contracts for up-to three years.
- Penalties for businesses violating the law include: a fine of up-to $50,000 or imprisonment for up-to two years, less a day, or both, for individuals; a fine of up-to $250,000 for corporations.
For more information regarding these new rules, view the Act.
Before signing an agreement
Before signing an agreement, make sure you take the time to read it completely from beginning to end, including any sections on the back. If the seller doesn’t want to give you ample time to review the agreement before signing it, this may be an indication that the agreement states something different from what the seller is telling you. Don’t ever be pressured into signing an agreement you don’t fully understand. If it is an important agreement, or one that is for a large sum of money, you should consider having a lawyer review it before you sign.
The Ministry of Government and Consumer Services and other public organizations have created several consumer programs, such as Consumer Protection Ontario, that provide valuable information to consumers, promote and enforce public safety laws, investigate alleged violations and handle complaints. For more information on these programs, and to learn more about direct agreements and other consumer rights, visit Consumer Protection Ontario.
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