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Consumer Protection (Ontario) Law - General CPA Law
Chapter 5 - General Consumer Rights
(01 July 2013)- Overview
(a) The Consumer Market
(b) CPA Consumer Rights
- CPA Principles of Interpretation
(a) Overview
(b) No Contracting Out or Waiver of CPA
(c) Principles to be Applied When Determining CPA Application
(d) In Case of Ambiguity
(e) Principles of Legislative Interpretation
- Warranties and Conditions Preserved
(a) Necessary Terminology
(b) 'Sale of Goods Act' Warranties and Conditions
(c) CPA Warranty of Fitness of Services
(d) No contracting Out or Waiver of Statutory Warranties and Conditions
(e) False, Misleading or Deceptive Representations Regarding Quality of Goods an Unfair Practice
- Prices, Estimates and Illegal Charges
(a) Overview
(b) 'Estimates'
(c) Exception to Ten Percent Rule Where Renegotiation
(d) Recovery of Illegal Charges
- Negative-Option Contract Formation
(a) Overview
(b) Unsolicited Goods and Services Defined; Exceptions
. Overview
. Exception for Accidental Receipt of Goods and Services
. Exceptions for 'Arrangements of Ongoing Supply' (author's term)
. Exception for Written "Future Performance Agreements" Where Further Solicitation Is Expressly Waived
(c) The "Unsolicited Consideration Rule"
. Overview
. No Legal Obligations Created by Unsolicited Goods or Services
. Demands for Payment Barred and Payments Recoverable
. No Legal Obligations Created by Payment, Inaction or Passage of Time
- Consumer Right to Rescind Agreement Where CPA Non-Compliance
1. Overview
(a) The Consumer Market
The consumer market - even the CPA-regulated consumer market - is very lop-sided in terms of legal skill and knowledge. On the supplier side there are typically large corporations who have both a huge economic interest in preserving the manner in which they transact business, and as well the finances to be legally sophisticated when going about it. In contrast, on the consumer side there are thousands and millions of atomized, usually legally-naive (and too often of little self-control) individuals for whom any single consumer transaction, while typically important, is not worth investing the significant time and money needed to assert their rights robustly. If there were ever a recipe for inadequate and weak enforcement of any legal regime, this is it.
This imbalance distorts the theoretically contractual ideal model of the marketplace in which the actors are equal in bargaining power and knowledge, and in which individual terms can be negotiated and altered to suit the needs and wants of the parties. The result of this imbalance is that consumer transactions are overwhelmingly 'take it or leave it transactions' (legally, 'contrasts of adhesion') with terms unilaterally advanced by the supplier. What terms there are are scrupulously drafted by suppliers' lawyers almost always in their favour and in fact rarely-read by consumers. In fact, any consumer who sat down and took the time to actually read the 'fine print' in the middle of a negotiation would be considered an oddity and an eccentric. Even asking for a copy to take home and review can be resisted by salespersons interested in little else other than closing one deal and moving onto the next.
While suppliers may periodically offer superficially-attractive incentives (eg. warranties, price-matching with competitors, time-limited offers, etc), such programs are typically surrounded with extensive legal exceptions and usually not worth the effort of the consumer to pursue. They are less truly benefits of a contract than shallow aspects of marketing programs.
(b) CPA Consumer Rights
As the reader will see, the Consumer Protection Act (CPA) governs consumer relations both by individual economic 'sectors' (eg. motor vehicle repair, chattel leases, credit agreements, etc) and generally, across all sectors in the marketplace [though see Ch.2: "Exemptions from Coverage" for full and partial CPA exceptions].
CPA rights can be both 'sector-specific' (see those links off the homepage) and general. This chapter explores the CPA's general consumer rights, which apply to all sectors unless they are expressly excepted or fall under federal jurisdiction.
2. CPA Principles of Interpretation
(a) Overview
This brief section addresses rules of statutory interpretation that apply to the CPA. They set out the general approach and perspective which courts and other adjudicators are expected to use when applying CPA law.
The field of contract law, from which statutory CPA grows, places a lot of importance on contractual interpretation: Contracts - Interpretation (see the first section).
(b) No Contracting Out or Waiver of CPA
The first and most obvious reaction by suppliers when faced with pro-consumer legislation is simply to try to 'contract out' of it. That is, to the already long, tiny and well-buried terms of the contract they would simply add another stating that: "The parties agree that this transaction is not governed by Ontario's Consumer Protection Act" or "The consumer hereby waives the protections of the Consumer Protection Act", or clauses of similar effect.
The CPA avoids this with the following provision: CPA s.7(1)
s.7(1) The substantive and procedural rights given under this Act apply despite any agreement or waiver to the contrary. In short, what rights you have under the CPA you have despite any terms, agreements or waivers to the contrary. You cannot give these rights up, even if you wanted to.
(c) Principles to be Applied When Determining CPA Application
Consumer contracts are invariably drafted by the supplier's side and are almost always grounded in traditional common law contract principles. In order to avoid the use of crafty, but technically plausible, contractual techniques to avoid consumer protections, the CPA also provides that: CPA s.3
In determining whether this Act applies to an entity or transaction, a court or other tribunal shall consider the real substance of the entity or transaction and in so doing may disregard the outward form. This provision can be used against more subtle and imaginative ways to avoid the CPA, for example by including statements within a written contract that are patently, factually false. An example might be where the text of the consumer agreement states that the purchase is for 'business purposes' (thus trying to avoid the contract being a 'consumer' agreement: CPA 1), where this is not truly the case. Other examples are such techniques are limited only by the imagination of suppliers' well-paid lawyers.
These principles are not limited to written contract situations, and may apply to verbal and implied contractual terms as well.
(d) In Case of Ambiguity
In another attempt to ensure that the CPA is applied in the fashion it was meant to be, the CPA expressly spells out a standard common law principle of contract interpretation requiring that any ambiguity in a contract is to be read against the party that drafted the contract (this is called "contra proferentum"): CPA 11
Any ambiguity that allows for more than one reasonable interpretation of a consumer agreement provided by the supplier to the consumer or ... shall be interpreted to the benefit of the consumer. A similar principle, applying to statutory wording, has been stated numerous times by the Supreme Court of Canada when interpreting social benefits legislation. This is the principle that any ambiguity in 'benefits-conferring' legislation goes in favour of the party belonging to the class that the legislation tries to help: Rizzo v Rizzo Shoes (SCC, 1998). The principle was applied in the Rizzo case to reach an employee-friendly interpretation of ambiguous terms in the Employment Standards Act, a piece of legislation that - like the CPA - attempts to mitigate the effect of power inequalities in the marketplace.
(e) Principles of Legislative Interpretation
Finally, the Legislation Act - sort of an overall 'interpretation' statute for all other Ontario legislation, provides that [Legislation Act, 64(1)]:64(1)
An Act shall be interpreted as being remedial and shall be given such fair, large and liberal interpretation as best ensures the attainment of its objects. Courts can apply this principle in favour of those claiming statutory rights.
3. Warranties and Conditions Preserved
(a) Terminology
A 'warranty' is a contractual term placing a duty on a supplier which, if breached, gives the consumer a right of action to sue for damages - though often a supplier will address it by voluntarily refunding money or replacing defective goods. However, breach of a warranty alone does not by itself allow the consumer to treat their duties under the contract as ended - that is, it does not allow the injured party to say: "the whole deal's off".
On the other hand, breach of a 'condition' (not a warranty), which is also a contractual duty placed on a supplier, allows the consumer to treat the entire transaction as ended - and normally also to sue for damages. Generally, conditions are more fundamental to the nature of the contract than warranties.
So the distinction is that a breach of condition allows the consumer to breach their contractual duties as well, while a warranty breach does not. That said, disputed warranty breach situations can get messy as sometimes alleged warranty 'damages' are set-off against (deducted from) consumer payments due. It's not far from that to the courthouse.
If a consumer agreement does not specify whether a term is a condition or a warranty, chances are it is a warranty. Though if a judge determines that the term is 'material' (ie. essential to the nature of the transaction), then it should be held to be a condition. The trouble with terms being unspecified in the consumer agreement as either a warranty or a condition is that the parties do not 'really' know which they are until a court tells them - usually months or even years later, all time during which the parties have no clear guidance as to their rights and duties. In those situations all a party can do is take their 'best guess' as to their rights, assess the risk of being wrong, and act accordingly.
(b) 'Sale of Goods Act' Warranties and Conditions
Ontario's Sales of Goods Act (SGA) legally implies some "conditions and warranties" into most contracts for the purchase and sale of goods.
For example, when the SGA applies and unless the sales contract shows otherwise, it is an implied condition that the seller is entitled to sell the goods (ie. owns them, will own them at the time required, or is the legitimate agent for someone who does or will) and that they are free from undisclosed encumbrances (ie. no unstated outstanding liens, executions, chattel mortgages or similar claims) [SGA s.13]
As well, there is an 'implied condition of fitness' that the goods are suitable for the purchaser's specific purpose (hint: it's good for a consumer to state their intended use, in writing if possible), and an 'implied condition of merchantability' (freedom from defects) where the seller regularly deals in the product and the purchaser has not inspected the goods before purchase [SGA s.15].
The CPA [s.9(2)] clarifies that these "implied conditions and warranties" apply to consumer transactions for the sale of goods, and extends it as well to the leasing of goods (chattels) "with necessary modifications" [chattel leases are covered in their own sector-specific chapter of that name]. In short, these SGA warranties are adopted into CPA law.
(c) CPA Warranty of Fitness of Services
Additionally, the CPA also 'deems' (imposes) a warranty of fitness - "of reasonably acceptable quality" - to consumer services [CPA s.9(1)]. This parallels the similar SGA warranty for goods (above).
(d) No Contracting Out or Waiver of Statutory Warranties and Conditions
Any attempt by a supplier, by contract or otherwise, to avoid or vary the above-noted (SGA and CPA) statutory warranties or conditions with respect to consumer transactions, is void [CPA s.9(3)]:CPA 9(3)
Any term or acknowledgement, whether part of the consumer agreement or not, that purports to negate or vary any implied condition or warranty under the Sale of Goods Act or any deemed condition or warranty under this Act is void. This provision requires some consideration, as the SGA provisions that it purports to preserve themselves allow contracting out by their wording [SGA 13] (ie. "unless the circumstances of the contract are such as to show a different intention"). In order for CPA 9(3) to have any meaning it must be read as rendering that phrasing inoperative, an interpretation which CPA 9(3)'s strong language could support. I am unaware of any cases on this issue.
If such avoidance attempts are embodied in the terms of a consumer contract then the terms may be severed from the contract, and neither shall such terms be applied as evidence of an intention not to apply the statutory warranty or condition [CPA s.9(4)].
(e) False, Misleading or Deceptive Representations Regarding Quality of Goods an Unfair Practice
In Chapter 6, s.2(b) ["Unfair Practices: False, Misleading and Deceptive: The False, Misleading and Deceptive Example List"] I cite how the making of a representation that meets the following description can be considered an 'unfair practice' [CPA 14(2)]:"A representation that the goods or services are of a particular standard, quality, grade, style or model, if they are not." This is only one of many 'false, misleading or deceptive representation' examples that fall under the CPA's more aggressive 'unfair practices' regime [Ch.6]. This particular provision (quoted) offers additional remedies to those dealing with warranty and condition disputes.
4. Prices, Estimates and Illegal Charges
(a) Overview
Who has not heard stories of the 'kitchen renovation from hell', where ambiguous terms and timelines negotiated with a home contractor result in continuing delays and price increases extending well beyond the intial expectations of the consumer. While sometimes such cost-overruns are reasonable (who knows what the floorboards are like until the floor is taken up?), the potential for abuse by the contractor is plain and cries out for plain disclosure and open discussion before a contract is executed (if indeed a written contract is used, which it should be). Note:
Most home contractor situations are governed by the CPA and fall under the disclosure rules set out for "direct agreements" [see Ch.3, s.3: "Forms of Consumer Agreements: Direct Agreements"] or for 'future performance agreements' [see Ch.3, s.2: "Forms of Consumer Agreements: Future Performance Agreements"]. To address this situation in part, the CPA has imposed some regulation of consumer contract charges and fees. These are discussed in this section.
(b) 'Estimates'
While the related consumer field of residential rent regulation has legally defined most landlord-tenant payments as "rent" in order to assert control over the payments from tenant to landlord, consumer protection legislation has focussed on the parallel concept of the 'estimate' - so common in home renovation and similar 'service' negotiations.
While there is no legal necessity that consumer-supplier negotiation involve the giving of an 'estimate', the CPA requires that where "a consumer agreement includes an estimate", that the final charge to the consumer may not exceed the estimate by more than ten percent [CPA 10(1)]. For this reason alone consumers should always request clear and unambiguous written estimates from prospective contractors and, if possible to have them included in any written contract.
Further, to ensure that suppliers do not react to this rule by attempting to terminate consumer contracts when disputes arise, the CPA further provides that "(i)f a supplier charges an amount that exceeds the estimate by more than 10 per cent" then the consumer may insist on compliance with the contract at the estimate amount [not the estimate plus 10%] [CPA s.10(2)].
These provisions effectively give an 'estimate', when it is given - and subject to the 10% increase (as long no more than 10% over is claimed) - the enforceability of a price warranty, and should provide an adequate defence against a supplier's lawsuit for anything over 110% of the estimate. Where the supplier invoices for more than 110%, the consumer can drag the price down to the estimate itself [as per CPA s.10(2) discussed above].
That said, estimates are also "representations" as defined in CPA law. As such, when they prove to be wrong or unfounded they can attract the application of the provisions against 'false, misleading or deceptive representations' set out in Ch.6: "CPA Unfair Practices":CPA s.1
"representation" means a representation, claim, statement, offer, request or proposal that is or purports to be,
(a) made respecting or with a view to the supplying of goods or services to consumers, or
(b) made for the purpose of receiving payment for goods or services supplied or purporting to be supplied to consumers. (c) Exception to Ten Percent Rule Where Renegotiation
Of course, if the substance of the contract is re-negotiated, then the 10 percent estimate rule can be amended [CPA s.10(3)]. Consumers should be careful however that it is a true re-negotiation (ie. additional goods or services are provided or some previously agreed are withdrawn), or else they risk simply releasing the supplier from their earlier estimate with no new consumer benefit.
These situations can get nasty, and consumers should know that 're-negotiations' under a threat to consumer goods held in the "custody or control" of a supplier (or anyone for that matter) is considered an "unfair practice" [CPA s.16], and invokes the remedies available for such practices [see Ch.6: "CPA Unfair Practices"].
(d) Recovery of Illegal Charges
In addition to the price cap brought about by an 'estimate, a variety of other price-limiting regulations, and regulations on 'extra charges' - are set out in the sector-specific chapters.
Any consumer who is charged and pays a 'fee or amount' that violates the CPA may demand a refund. Such a demand (or notice) must be made in accordance with CPA 'notice' procedures and must be made within one year of the payment. Consumer-issued Notice procedures are discussed in Ch.7, s.7 ["Civil Remedies: Consumer-Issued Notice Procedures"].
The supplier must refund the payment "within 15 days after the day the consumer demands it" [CPA s.98(1,2); CP Reg s.84].
Additionally, the consumer may sue the supplier for recovery of any payments made in contravention of the CPA, even if the supplier did not overtly 'charge' it (eg. voluntary pre-payments, or inadvertent or mistaken payments) [CPA s.98(3,4)] [see Ch.7, s.9: "General Civil Remedies: Civil Court Remedies for General CPA Rights").
5. Negative-Option Contract Formation
(a) Overview
Rudimentary contract formation requires the exchange of valuable consideration (ie. money, goods, services - or promises thereof) between parties in order to form a binding contract. One of the more obnoxious of sales techniques is to attempt to replace valuable consideration in this role with simple inaction on the part of the consumer, attempting to bind them through their inaction.
Ontarians may recall past efforts by Rogers Cable to impose 'negative-option billing' on their then-current customers. The technique was simply to send notices to existing customers stating that if Rogers did not receive an express statement to the contrary from consumers, that it would presume they wanted the listed additional services and would start billing accordingly. The tactic met with great public outcry and was eventually withdrawn.
Another favorite 'negative option' technique is to leave goods with consumers, asserting that their failure to return them in satisfactory condition within a fixed time-frame constitutes a contract of sale. Collection efforts would then ensue accordingly, with the supplier playing the odds that most consumers would pay-up rather than risk the annoyance of the dispute. Such techniques operate in a netherworld between honest businesses and crime.
Such techniques have little claim to legitimacy as contract-formation methods under the common law of contracts. In the Rogers case they played heavily on the fact that many people would simply miss or otherwise acquiese to the increase, or that the process of exercising their (negative) option would prove too cumbersome for many (who has not experienced the frustration of trying to reach or deal with the 'customer service' departments of a large telecommunications provider?).
In what I refer to as the "unsolicited consideration rule", the CPA [s.13] purports to prohibit such 'negative option' techniques from being effective to create consumer obligations, though in a fashion that allows many exceptions. In doing so it has structured itself around the pivotal concept of whether the goods or services have been 'solicited' by the consumer. The concept of 'solicitation' is integral to the 'negative option' in that the supposed 'contract' has not involved any element of solicitation on the part of the consumer.
Below I explore the details of the "unsolicited consideration rule", what arrangements the law includes within this prohibition, and the exception from it. It may be by these exceptions that the rule is rendered largely ineffective.
(b) Unsolicited Goods and Services Defined; Exceptions
. Overview
The concept of 'solicitation' is fairly broad and straightforward, and describes any situation where a consumer actively requests a supplier to provide goods or services. 'Unsolicited' then covers any situation lacking such an active consumer request, and many attempts to assert the formation of a contract on such a basis are unenforceable [CPA s.13(1-3)] [the "unsolicited consideration rule": see (c) below].
However, not all arrangements are caught within this net. The following are expressly excluded from the definition of "unsolicited goods and services", and thus are effectively exempt from the "unsolicited consideration rule" [CPA s.13(9)]:
. Exception for Accidental Receipt of Goods and Services
Where a person receives goods or services intended for another person, and where the recipient 'knew or ought to have known' of the mistake, then (even though they are still technically unsolicited by the recipient), they are exempted from the definition of "unsolicited goods and services", and therefore from the "unsolicited consideration rule".
'Knew or ought to have known' is legally both a subjective ('knew') and an objective ('ought to have known') standard, satisfied (respectively) either by actual knowledge of the mistake on the part of the recipient, or by ignorance brought about by negligence on their part in not inquiring further into the situation (eg. 'playing dumb' or just being inattentive where a prudent person wouldn't be). The subjective standard will not be met where an innocence recipient has no particular reason to investigate why they have received the goods and services, and as such the "unsolicited consideration rule" should apply in their favour.
Of course, this does not mean that the accidental receipt of goods or services alone forms a contract between the recipient and the supplier. That is still a matter to be judged in light of the behaviour and intentions of the parties and the common law of contract. It may be that in most such circumstances the supplier's remedy lies in restitution rather than in contract.
. Exceptions for 'Arrangements of Ongoing Supply' (author's term)
This is a broad category which encompasses formal written contracts, but which also extends beyond it to much more informal 'arrangements' whereby business is transacted continuously, with or without regularity.
Some of these, particularly situations of continous or regular supply, are plainly contracts. Others though are not and while they may resist formal categorization as contracts, the market tolerates many existing irregular 'arrangments' of supply of goods and services which are grounded either in verbal communications or by implication from behaviour, either with or without written evidence of intention. As well, while they may not be contracts as such, many of them would meet the broader definition of "consumer transaction" set out in the CPA [s.1].
Uncertainty as to contractual status aside, it is almost certain that - minimally - any court will enforce payments for such deliveries unless and until the supplier has received reasonable prior notice from the consumer to terminate the arrangement.
To facilitate such common and ongoing arrangements, goods and services delivered or provided under such 'arrangements of ongoing supply' will not be considered to be "unsolicited" for the purposes of the "unsolicited consideration rule" unless the newly-supplied goods or services are 'materially changed' (ie. significantly different in nature, quantity, etc) from what is normally supplied.
What constitutes a 'material change' is not exact in law, but the CP Regulation sets forth a definition which should assist [CP Reg s.20]:CP Reg s.20
... a change or a series of changes is a material change if it is of such nature or quality that it could reasonably be expected to influence a reasonable person's decision as to whether to enter into the agreement for the supply of the goods or services. Is the change one that might have been considered pivotal in an initial decision to buy? Another way of putting this is that 'immaterial' (minor in nature or degree) changes in supply avoid the "unsolicited consideration rule".
The concept of 'material breach' finds normal operation in contract law as being a contractual breach so basic or so serious as to justify the aggrieved party in considering the entire contract at an end - thus terminating their own duties under it as well. In contract law this is sometimes referred to as breach of a "condition".
A contractual breach of a lesser degree on the other hand would only justify the aggrieved party in suing for damages (ie. a breach of warranty, or term), while still technically being under a duty to perform their duties under the contract.
As with the law of contract remedies, the difficulty lies in determining when a breach (or here, a 'change') is 'material' or not. The problem is that, unless the change is extreme, this is not known until well after the fact when a judge or tribunal finally declares on it. Unfortunately for all concerned this is invariably long after the parties must make the practical decision of whether to consider the arrangement at an end or not, and as such is inherently risky.
Further, in an 'exception to an exception', the 'material breach' re-assertion of the "unsolicited consideration rule" itself may be avoided if the supplier "is able to establish that the consumer consented to the material change." While such consent may be made "orally, in writing or by other affirmative action", the onus of proving consent lies on the supplier [CPA s.13(4,5)].
An example of such consent might be a comment from the consumer such as "Well, let's try it". This is a comment (best made in writing, keeping a copy) that a wise consumer might supplement with: "But if we don't like it you take it back" (goods) or "But we aren't making any commitments for the future" (goods or services), thus qualifying their consent in a fashion that avoids or limits their obligation to purchase.
. Exception for Written "Future Performance Agreements" Where Further Solicitation Is Expressly Waived
The CPA defines "future performance agreements" as follows:CPA 1
In this Act,
"future performance agreement" means a consumer agreement in respect of which delivery, performance or payment in full is not made when the parties enter the agreement; In other words, some part of either party's consideration for the contract is a 'promise' to perform (or pay) in the future. "Future performance agreements" are discussed in more length in Ch.3, s.2: "CPA Forms of Consumer Agreements: Future Performance Agreements".
The exception here is that written 'future performance contracts' can avoid the "unsolicited consideration rule" by inclusion of a clause to that effect (ie. a clause allowing the supplier to add new goods or services without further solicitation by the consumer) in the written contract - even if such additions are 'materially' different from what was initially contracted for.
Allowing such clauses is both an exception to the main 'no contracting out' provisions of CPA s.7(1) [see s.2(a) above], and a 'loophole' of potentially dramatic proportions. Consumer contracts are very often in writing (the notorious 'fine print'), and very often (perhaps predominantly) made in anticipation of future or ongoing delivery (immediate 'over-the-counter' sales rarely require a written contract).
Further, the insertion of such a clause into a consumer contract - if upheld by a court or other decision-maker - probably satisfies the common law contract requirement that the parties to a contract must have an 'intention' to enter into enforceable relations, thus in effect allowing the supplier to unilaterally dictate the goods and services to be supplied under the contract - the very mischief that the "unsolicited consideration rule" was designed to address in the first place.
(c) The "Unsolicited Consideration Rule"
. Overview
As discussed above, the "unsolicited consideration rule" is the CPA's attempt to block the creation of consumer obligations grounded in 'negative option' or unsolicited consideration. While this rule is weakened by the broad exceptions allowed for in the definition of "unsolicited goods and services" discussed in (b) above, the present sub-section explains the rule insofar as it does operate.
. No Legal Obligations Created by Unsolicited Goods or Services
The first and primary prohibition is that it bars the creation of any contractual duty on the part of a consumer who receives unsolicited goods or services - ie. they need not pay for them [CPA s.13(1)].
An additional aspect of the rule is to bar the creation of any restitutionary legal duties on the part of the consumer as well. Restitution is an area of the civil law dealing with compensation for or return of goods to those who have been 'unjustly deprived' of them, such as through their wrongful retention by another party, or by being damaged by another party. While it is doubtful that the common law would impose a restitutionary duty in the case of 'negative option' sales techniques in the first place, making this clear in the CPA can't hurt.
. Demands for Payment Barred and Payments Made Recoverable
As well, any efforts by a supplier to "demand payment or make any representation that suggests that a consumer is required to make payment" with respect to unsolicited goods or services are also barred [CPA s.13(2)]. Consistent with the above-noted bar against the creation of restitutionary duties, this bar operates despite the "use, receipt, misuse, loss, damage or theft" of the unsolicited goods or services. In other words, if you break it, you don't have to pay for it.
Where a payment for unsolicited goods and services is made, the consumer may make a demand that it be refunded to them. Consumer-issued notices procedures are discussed in Ch.7, s.7: "CPA Civil Remedies: Consumer-Issued Notice Procedures". Such a demand must be made within one year of the payment being made, and the supplier must refund the payment within "15 days after the day the consumer demands the refund" [CPA s.13(6,7); CP Reg s.21].
Additionally, the consumer may sue the supplier for return of the payment [CPA s.13(8)] (see Ch.7, s.9: "CPA Civil Remedies: Civil Court Remedies for General CPA Rights").
. No Legal Obligations Created by Payment, Inaction or Passage of Time
Negative-option techniques are 'triggered' (at least according to the supplier's distorted interpretation of contract law) by inaction. That is, unless the consumer actively denies or refuses the 'contract' within a specified time (and usually in a specific and awkward manner), the notion is that a contract' is deemed to have been made.
The CPA [s.13(3)] bars this typical trigger, either in the form of "inaction or the passage of time" - but it also extends to bar the creation of a contractual relationship even when an actual payment is made by the consumer. This is a very progressive addition to the "unsolicited consideration rule" as it captures payments made both inadvertently and through ignorance or fear on the part of the consumer as to their legal duties.
Such payments made could be the subject of a lawsuit under the provisions for recovery of illegal charges [see 4(d) above, 'Prices, Estimates and Illegal Charges: Recovery of Illegal Charges'].
6. Consumer Right to Rescind Agreement Where CPA Non-Compliance
As a general deterrent to suppliers' attempting CPA-prohibited practices, the CPA provides that a consumer agreement is not binding on the consumer "unless the agreement is made in accordance with this Act and the regulations" [CPA s.93(1)]. The right is subject to exception by a court on grounds of equity (ie. unfairness to the supplier) [CPA 93(2)].
This seemingly simple but broad remedial provision is fraught with practical difficulties, particularly when invoked on technical non-compliance (ie. where the non-compliance is immaterial to the consumer's decision to enter into the agreement, or has caused them no legal injury). This is a central problem to the efficacy of the present CPA regime.
These issues are discussed at length in Ch.7, s.3: "CPA Civil Remedies: General Rescission (Cancellation) Remedies".
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