By Jason A. Self, February, 2005.
On July 30, 2005, the long-awaited regulation under the Consumer
Protection Act, 2002 (the "Act") will come into force. Presumably,
this also means that the still unproclaimed Act will take effect on
the same day. The Act is an extensive overhaul of the prior consumer
protection legislation in Ontario and represents the legislative objective
of providing increased protection to consumers from shoddy products
and unscrupulous sellers. The purpose of this newsletter will be to
provide a brief and general overview of what every consumer in the
province should know about this complex statute.
Application of the Act
Perhaps one of the most often confused aspects of consumer protection
legislation generally is to what transactions the legislation applies.
To put it somewhat simplistically, the Act applies to most transactions,
in the form of written or oral agreements, where either the consumer
or the seller is located in Ontario when the transaction takes place.
The key to the application is that "Consumer" is a defined
term within the Act. A Consumer is defined as a person who acts for
personal, family or household purposes and does not include someone
who acts for business purposes. Therefore, a person who purchases
a lawnmower to cut the grass at their residential home is a Consumer
and the Act would apply to the purchase. On the other hand, a landscaper
who purchases a lawnmower for their business is not considered a Consumer
under the Act, and therefore, the Act would not apply.
One should also note that there are specific types of transactions
that are excluded from the scope of the Act. Although seemingly redundant
because these transactions would not involve a Consumer as defined
by the Act, one notable exclusion are transactions for the purchase,
sale or lease of real property (i.e. land).
Implied Warranties
If a purchaser is a Consumer as defined by the Act, they will now
enjoy a series of implied warranties that will apply to the product
purchased. As these warranties are implied, there is no need for them
to be written or even discussed. In addition, the Act specifically
prohibits the waiver of any rights that are provided by the Act. The
result is that the implied warranties apply to all transactions to
which the Act applies.
When contracting for services, the Act warrants that the services
supplied shall be of a reasonably acceptable quality. For example,
if a Consumer has contracted to have a new counter-top installed in
her kitchen, there will be an implied warranty that the counter-top
will be installed in a proper manner to a standard that can be reasonably
expected. It should be pointed out that the term "reasonably
acceptable quality" is not defined in the Act and, as a result,
will be defined by the courts.
When contracting for goods, the Act also sets out certain implied
warranties that apply in all cases. The Act provides that all of the
implied warranties contained in the Sale of Goods Act apply to transactions
for goods to which the Act applies. Again at the risk of over-simplification,
in practical terms this means that the goods purchased will be fit
for the purpose in which they were purchased.
In some cases, the purpose will be presumed. For example, a new camera
will have the implied warranty that it will take a good and clear
picture of reasonable quality. In other cases, the purpose may be
defined by the factors surrounding the transaction. For example, if
a Consumer informs a saleswoman that he requires a new part for his
1995 Honda Accord, there will be an implied warranty that the part
he is provided will be one of reasonable quality that is able to be
used in that particular model of car. To be sure, if a seller represents
that a product will be adequate for a specific purpose, then there
is an implied warranty that the product will be fit for that defined
purpose.
Unfair Practices
In addition to providing the Consumer with guaranteed warranties,
the second primary objective of the Act is to address the sales practices
of unscrupulous sellers (termed by the Act as "unfair practices").
In short, this part of the Act prohibits a seller from making any
false, misleading or deceptive representations. The Act goes on to
provide specific examples of unfair practices. The duty not to engage
in unfair practices can generally be summed up as a duty to act in
good faith and be truthful. Therefore, if the salesman tells you that
the used car had only one owner who was 83 and only drove the car
to the store on weekends, and this turns out not to be true, then
this is an unfair practice.
Interestingly, the Act also prohibits what it calls "unconscionable
representations" and goes on to provide specific examples. It
would seem that some of the examples could also be defined as unfair
practices but there also appears to be at least a minimal duty on
the seller to look out for the best interests of the Consumer. It
will be interesting to see how this section will be utilized by consumers
and the courts.
Specific Types of Agreements
It should be noted that the Act provides for specific rules that apply
to specific types of agreements. The specific agreements addressed
are time share agreements, personal development services, Internet
agreements, direct agreements and remote agreements.
While a discussion of each of these specific types of transactions
is beyond the scope of this discussion, a few general comments can
be made. Generally, the Act provides for specific notice requirements
to be abided by when dealing in these specific types of agreements.
In addition, some of these specific transactions come with an implied
"cooling-off" period whereby the purchaser may be entitled
to unilaterally walk away from the contract within the prescribed
time frame. When dealing with Internet transactions, the seller is
now obliged to provide the consumer with complete disclosure of the
agreement as well as a copy of the actual agreement. Provision of
the agreement can be made by email, fax or ordinary mail. Performance
must also be completed within a prescribed time frame or the consumer
may obtain the right to rescind the contract.
In addition to the categories set out above, the Act deals with repairs
to motor vehicles, credit agreements and leasing, all in separate
Parts of the Act. Consumers should be aware of the categories of specific
agreements that are addressed so that they understand that they may
be entitled to additional rights as provided by the Act. Specific
discussion of how the Act deals with transactions for the repair of
motor vehicles warrants specific comment as consumers may find these
provisions to be particularly empowering when dealing with an industry
that has a less than unblemished track record.
Repairs
The Act has specific provisions dealing with repairs to motor vehicles
and "other goods". It appears, however, that at this point,
the Act will only apply to repairs on motor vehicles. The Act ensures
that estimates for repair work will be accurate and that the actual
cost will not exceed 10% of the estimated cost. The Act also provides
that the Consumer must make written authorization of any work to be
performed and can require that the parts replaced in the vehicle be
returned to the Consumer.
Finally, the Act provides the implied warranty that each new or reconditioned
part installed in a vehicle and the installation itself shall be warrantied
for a minimum of 90 days or 5,000 kilometres, whichever comes first.
What is not clear is if the general implied warranty of fitness for
purpose could act to increase the prescribed minimum warranty period
on vehicle repairs.
Remedies Available
Practically speaking, if a Consumer purchases a good or service in
a transaction to which the Act applies, and the good or service does
not conform to an implied warranty, the primary remedy for the Consumer
would be to demand replacement of the good, re-performance of the
service or a refund of their money. If a Consumer is the victim of
an unfair practice, the Act provides the authority to the Consumer
to rescind the agreement.
If there is a deficient repair made to a vehicle, the Consumer can
demand that the deficiency be remedied. If the vehicle is unsafe to
return to the original repairer, the Consumer may have another shop
perform the repair and demand reimbursement of those reasonable costs
of the repair and of the towing of the vehicle.
The court also has the authority to award exemplary or punitive damages
in addition to any other remedy. This would imply that these types
of damages could be awarded in any transaction to which the Act applies.
The courts, however, would likely reserve these types of damages for
the most egregious of conduct.
Summary
In summary, if you are a purchaser feels that you have not received
the service or quality product you thought you would be getting, you
should ask yourself the following questions:
1. Are you a Consumer? In other words, were you purchasing for personal,
family or household purposes?
2. Did you receive poor service or shoddy merchandise? Was the product
you bought not able to do the job it was supposed to do?
3. Were you the victim of unfair practice? Did the seller tell you
something you found out to be false? Did the seller make a promise
that was not kept?
