Pleasing the customer is likely one of the top priorities of your business. A happy customer generally contributes to a happy and healthy business. Aside from the potential to increase your business profits, there are other reasons to keep your customers satisfied. Customers have various rights under provincial consumer protection legislation, which can include the right to cancel a contract and the statutory right to sue for damages in certain situations. To avoid being caught off-guard by any claims brought by your customers, you should be aware of your responsibilities prescribed by provincial consumer protection legislation.

Generally, all provinces have similar consumer protection legislation regulating conditions and warranties in sales contracts, unfair business practices, and the licensing and registration of businesses dealing with the public on a regular basis. In Ontario, the Consumer Protection Act, 2002 (the “CPA”) applies to all consumer transactions where the consumer or the person engaging in the transaction with the consumer is located in Ontario when the transaction takes place. The CPA specifically provides protection to consumers who are individuals acting for personal, family or household purposes. This means that individuals acting for business purposes will not be able to rely on the remedies provided by the CPA.

Under the CPA, there are several general rights and warranties available to customers of which business owners and managers should be aware. For example, any
contracts to be signed by potential customers should use clear and unambiguous language. The CPA specifically states that where an agreement is entered into, any ambiguity in that agreement will be interpreted for the benefit of the consumer.

Additionally, if your business is in the practice of providing written estimates, it is important to ensure that this estimate will be similar to the cost of the final product. Under the CPA, the supplier cannot charge the consumer an amount that exceeds the written estimate by more than 10 per cent. If the supplier does charge more than 10 per cent, the consumer may require that the supplier provide the goods or services at the estimated price.

Consumer protection legislation also prevents the waiver of certain implied warranties and conditions awarded by provincial Sale of Goods Acts. As an example, in Ontario, under the Sale of Goods Act, there are implied conditions in certain specific situations that goods will be of merchantable quality and fit for their intended purpose. According to the CPA, these implied conditions cannot be waived by a consumer. Additionally, the supplier is deemed to warrant that any services supplied are of a reasonably acceptable quality. As a business owner or manager, it is important to keep these implied warranties and conditions in
mind while conducting your daily business.

The CPA and other provincial consumer protection legislation also identify specific types of agreements in which extra responsibility is placed on a supplier (i.e. direct sales agreements, “remote” agreements as defined by statute, time share agreements, etc.). For example, with agreements made over the Internet, the supplier must disclose certain information to the consumer prior to entering into the agreement. Any disclosure required by the CPA must be clear, comprehensible and prominent. The online agreement must also provide the consumer with an express opportunity to accept or decline the agreement and to correct errors immediately before entering into the agreement. If this is not done by the supplier, the consumer has up to seven days after receiving a copy of the internet agreement to cancel it.

A “direct agreement” is another form of agreement that is regulated in each province and territory. Direct agreements are concluded in person, but not at the location of the supplier’s business. In all provinces and territories, there is a 10-day “cooling-off” period in which a consumer has the ability to cancel the contract without reason. In Ontario, this 10-day “cooling-off” period also applies to time share agreements and remote agreements (i.e. where, other than internet agreements, the consumer and the supplier are not present together when they enter into a contract).

It is important to ensure that your business is not unintentionally engaging in what is known under consumer protection legislation as an “unfair practice.” Essentially, it is considered to be an unfair practice for a person to make a false, misleading or deceptive representation. Examples of false, misleading or deceptive representations include, but are not limited to: exaggerating the quality of the services or goods to be purchased, failing to truthfully disclose the costs involved in the agreement; providing representations that specific price advantages exist when they do not; misrepresenting the authority of a salesperson to negotiate the final terms of a settlement; etc. Where a supplier has engaged in what is considered to be an unfair practice, the consumer is entitled to cancel the
agreement and is also entitled to any other remedy at law, including an action in court.

Consumer agreements not made in accordance with the CPA or its regulations are not binding on consumers. Penalties for non-compliance with consumer protection legislation vary from province to province. In Ontario, a person is guilty of an offence if that person fails to comply with certain requirements under the CPA. Additionally, any Officer or Director of a corporation can be found guilty of an offence if he or she fails to take reasonable care to prevent the corporation from committing an offence under the CPA. If convicted of an offence, an individual would be liable to a fine of up to $50,000 or imprisonment for a term of up to two years less a day or both. A corporation that is convicted of an offence is liable to a fine of not more than $250,000.

In summary, by keeping informed of your general and specific responsibilities to your customers, you may more likely avoid a situation in which a disgruntled customer cancels your contract, brings a claim against your business, or a situation in which your business is charged with an offence.

The content of this article is intended to provide general information on consumer protection legislation and is not intended as advice or an opinion to be relied upon in any particular circumstance. Professional advice should be obtained for specific applications of consumer protection legislation.

Ariana Haalboom practices law as an Associate at McLean & Kerr LLP in the areas of corporate/ commercial law, real estate, and litigation.