On July 30, 2005 the new Consumer Protection Act, 2002 (the “CPA”) came into force in Ontario. The CPA replaces the former Consumer Protection Act as well as other consumer-related legislation.
The CPA applies to transactions between suppliers (i.e. businesses) and consumers where either the supplier or the consumer is in Ontario at the time of the transaction. Consumer agreements must now be prepared in accordance with the requirements of the CPA in order to be binding. Further, parties cannot waive or contract out of their rights under the CPA. Nonetheless, in certain circumstances, a court may determine that it would be inequitable for the consumer not to be bound to an otherwise non-compliant consumer contract.
A review of some of the more salient provisions of the CPA are discussed below.
Consumer Rights and Remedies
Under Part II of the CPA, consumers have the right to have a dispute resolved through the Courts. Many consumer agreements attempt to deny consumers this right by providing that the parties agree to resolve disputes solely through arbitration, a costly method for minor disputes which would be better resolved through Small Claims Court. The CPA recognizes this and protects consumers accordingly.
Other protections afforded consumers under Part II include:
- a supplier is deemed to warrant that the services supplied under a consumer agreement are of a reasonably acceptable quality;
- the implied conditions and warranties applying to the sale of goods by virtue of the Sale of Goods Act are deemed to apply, with necessary modifications, to goods that are leased or traded or otherwise supplied under a consumer agreement;
- if a consumer agreement includes an estimate, the supplier cannot charge the consumer an amount that exceeds the estimate by more than 10 per cent. If it does, the consumer can require that the supplier provide the goods or services at the estimated price; and
- any ambiguity in a consumer agreement or in mandatory disclosure information provided to the consumer is to be interpreted to the benefit of the consumer.
Under Part III of the CPA, it is an unfair practice to make a false, misleading, deceptive or unconscionable representation. A number of examples of such representations are set out in the CPA which, if made, entitle the consumer to rescind a consumer agreement (whether written or oral) that has been entered into. Such representations include:
- a representation that the goods or services have sponsorship, approval, performance characteristics, accessories, uses, ingredients, benefits or qualities they do not have;and
- a representation that a service, part, replacement or repair is needed or advisable, if it is not.
Specific Consumer Agreements
Part IV of the CPA deals with specific consumer agreements, namely future performance agreements (where delivery, performance or payment in full is not made when the parties enter the agreement), time share agreements, personal development agreements (gym memberships, dance lessons, etc.), internet agreements, direct agreements (negotiated/ concluded in person but not at a normal place of business), and remote agreements (agreement entered into when the consumer and supplier are not present together). The regulations under the CPA set out the specific requirements for each of these types of agreement. Failure to meet these requirements could result in an unenforceable agreement or extended rights being granted to the consumer.
Cooling-off periods, for consumers to change their mind, have been increased or now exist where they have not in the past. Consumer agreements must be in writing and cancellation rights exist for the consumer if copies of such written agreements are not provided to the consumer within a prescribed time.
It would be prudent for any supplier or service provider to ensure that its consumer agreements comply with the new requirements of the CPA.
This is the first of a two-part series on the Consumer Protection Act, 2002. Part 2 of this article will appear in the January 2006 issue of The Fine Print.