This is the second of a two-part series on the new Consumer Protection Act, 2002 (the “Act”) which came into force on July 30, 2005. Part 1 of this article appeared in the October 2005 issue of The Fine Print.
In Part 1 of this article, we discussed the requirements under the Act concerning Consumer Rights and Remedies, Unfair Practices and Specific Consumer Agreements.. In this Part of the article, we discuss the salient provisions of Parts VI – VII of the Act dealing with Repairs, Credit Agreements and Leases.
Repairs
Part VI of the Act deals with repairs to motor vehicles and other goods. It is important to note that “goods” under the Act is defined as “any type of property”, which includes real property . One of the protections afforded consumers under this part of the Act is that no repairer is entitled to charge a consumer an amount in excess of 10% of the amount of its estimate. The Act requires that a repairer provide a consumer with an estimate (or risk not getting paid) unless the estimate is waived by the customer. A fee cannot be charged for an estimate unless the consumer is first informed of the amount of the fee. Furthermore, an estimate fee cannot be charged if the repair work is later authorized and carried out.
The corresponding regulations to this Part of the Act set out the prescribed requirements for, among other things, estimates, authorizations and invoicing. In view of these requirements, it would be prudent for anyone engaged in the repair of property, of any kind, to ensure that its form of agreement or invoice meets these requirements. If the agreements do not comply, there is a risk that a consumer, relying upon its rights under the Act, would not be required to pay for the repairs.
Another significant provision requires that vehicle repairers are deemed to warrant both all new or reconditioned parts installed, and the labour required to install them, for a minimum period of 90 days or 5,000 kilometres or any greater minimum period that may be prescribed by the Regulations.
Credit Agreements
Part VII of the Act sets out the disclosure requirements under Credit Agreements. Failure by a creditor to include the prescribed disclosure can result in the consumer not being liable to the creditor for the cost of credit, such as interest and prepayment charges. Initial disclosure statements for fixed credit must now include the following information:
- when advances are to be made;
- the right of the consumer to terminate an optional service and receive a proportionate refund;
- details of grace periods;
- the total of all payments and the timing and amount of each payment
- when interest begins to accrue and the circumstances under which it is compounded;
- details of any payment deferrals;
- prepayment rights, charges, and penalties that apply to the credit agreement
Of significance, a consumer now has a right under the Act to prepay a loan, either the full balance at any time or any portion of the balance on a scheduled payment date, without payment of a prepayment charge.
Leasing
Part VIII of the Act deals with leases, in excess of four months, those with indefinite terms and those with residual obligations. Only goods leased in respect of a residential tenancy are excluded. The Act prescribes the information that must be disclosed to a consumer, in a prescribed form, prior to the parties entering into a leasing contract.
Conclusion
If they have not done so already, Ontario businesses providing goods or services to consumers, whether those consumers are located in Ontario or not, and businesses located outside of Ontario providing goods and services to consumers in Ontario, are required to modify the forms of their consumer agreements as well as to alter some of their business practices in order to comply with the requirements of the Act.
