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CONSUMER LAW

Sector-Specific Consumer Law
(01 July 2013)

Vacation Club Agreements

  1. Overview
    (a) Definition
    (b) Comment
  2. Content and Disclosure Requirements
  3. Early Consumer Cancellation of Consumer Agreement
  4. Amendment, Renewal and Extension Regardless of Related Consumer Agreement Terms
    (a) Overview
    (b) Amendment, Renewal or Extension Requirements
    (c) Effective Date
    (d) Early Consumer Cancellation Rights Renewed for Vacation Clubs
    (e) Original 'Form' of Vacation Club Agreement Preserved
  5. Remedies
    (a) Overview
    (b) General CPA Civil Remedies
    . Overview
    . Rescission
    . Restitution
    . Right of Civil Action
    . Special Credit Card Remedies
    . Common Law Right of Action Preserved
    (c) sector-Specific Remedies
    (d) Unfair Practices
  6. Exemptions
    (a) Payday Loans
    (b) Real Estate Purchase, Sales and Lease Agreements
------------------------------
CAUTION #1

This chapter involves law from the Ontario Consumer Protection Act (CPA). Anyone considering using the CPA should first carefully sort out which of its rules apply to their situation. DO NOT ASSUME THAT BECAUSE YOU FOUND THE CHAPTER DEALING WITH THE RELEVANT ECONOMIC SECTOR THAT YOU HAVE ALL THE RIGHT RULES. The steps to do this properly are explained at this link:

Identifying Which CPA Rules Apply to Your Situation

CAUTION #2
re "Time Shares"

Note that the CPA 20(1) provision quoted below (defining a "vacation club") excludes paragraph (a). Paragraph (a) sets out the definition for 'time shares', which are the subject of their own Part B chapter of that name. For reasons of drafting simplicity (certainly not interpretive simplicity), the CPA includes 'vacation clubs' within the larger - and quite distinct - category of 'time shares'. Be aware of this distinction especially when considering the rule conflict provisions set out in Part C, Ch.4.

1. Overview

(a) Definition

As is noted above, the Consumer Protection Act (CPA) includes "vacation clubs" quite inappropriately within the larger definition of "time share agreements" ['time share agreements' are subject of their own Part B chapter of that name]. However within this definition a distinct 'vacation club' definition is found [CPA 20(1)(b)]:
CPA 20(1)
"time share agreement" means a consumer agreement by which a consumer,

(b) is provided with access to discounts or benefits for the future provision of transportation, accommodation or other goods or services related to travel.
(b) Comment

Probably the most widely-known 'vacation club' consumer agreements are 'air mile' plans, where consumers accumulate 'air mile' points upon the purchase of certain items by credit card. Points are then (ideally) 'redeemed' in exchange for air travel or similar services, typically however subject to a range of complex and ever-changing exemptions and conditions. Terms and conditions of such arrangements are ostensibly dictated by the contract between the parties but in practice these are subject to unilateral and arbitrary change by the supplier. Suppliers of air mile programs harvest and typically sell consumer-provided information and consumer transaction data for future marketing purposes.

Note that 'vacation club' consumer agreements will most often be contractually merged with larger credit card consumer agreements, which are covered in the separate Part B chapter entitled "Loans and Credit Agreements". That topic alone is quite complex, and will be further complicated by the additional of these 'vacation club' CPA rules.

Note in particular that the 'vacation club' disclosure rules (s.2 immediately below) impose no 'supplementary disclosure' or notice requirements when terms (particularly 'points' redemption terms) are unilaterally changed by the supplier, while most credit card agreements do have such requirements due to their status as "open credit" consumer agreements [see Part B: "Loans and Credit Agreements", s.3(e), "Disclosure Duties at Commencement and During Credit Agreements: Disclosure Duties for Open Credit"]. In some cases of unilateral 'vacation club' agreement changes it may be possible to argue that 'supplementary disclosure' is required under the consumer agreement's additional status as an 'open credit agreement' - but each such situation must be examined on its own facts.

Note further that the 'amendment' rules set out in s.4 below do NOT supercede contractual terms for amendment set out in a vacation club consumer agreement, and therefore those provisions cannot be used to address situations of unilateral change which are allowed for and tolerated under the consumer agreement.

Practically the only sustained consumer advocacy in this area will be in the form of class actions. The amount involved in most consumer disputes over vacation club entitlements makes it prohibitive for individual consumers to self-advocate, and the field has huge potential for supplier abuse.


2. Content and Disclosure Requirements

All vacation club consumer agreements must be in writing, be signed by the both parties, be delivered to the consumer and contain the following disclosure [CPA 27; Reg 26(1)]:
  • Consumer Name

  • Supplier Name

    If supplier is a proprietor, partnership or corporation, their legal name. If supplier is using a business name, that name as well.

  • Contact Information of Supplier

    The telephone number and business address of the supplier, and information respecting other ways, if any, in which the supplier can be contacted by the consumer, such as their fax number and e-mail address.

  • Names of Supplier Agents

    The names of persons (if any) who solicited and negotiated with the consumer, and the name of the person who concluded the agreement with the consumer.

  • Date When and Place Where Agreement Executed

  • Date of Commencement and Term of Agreement

    The commencement date of the agreement, and its term (duration) - even if indefinite.

  • Description of Vacation Club Benefits

    A fair and accurate description of the access to be provided to the consumer with respect to discounts or benefits for the future provision of transportation, accommodation or other goods or services related to travel.

  • Payment Terms Listed

    An itemized list setting out,

    - the amount of the one-time consumer payment upon entering into the agreement and the goods or services for which it is payable, including terms and methods of payment,

    - the amount of each additional one-time consumer payment and the good or service for which it is payable, including terms and methods of payment and

    - the amount and frequency of the periodic consumer payments and the good or service for which each payment is payable, including terms and methods of payment.

  • Optional Goods and Services List, With Prices

    An itemized list setting out, each optional good and service, including a facility and a membership, that the supplier represents will be available to the consumer, and it's cost - including terms and methods of payment.

  • Changes in Payment Amounts and Extra Charges

    If any of the amounts set out in the agreement is subject to change or if the consumer may be required to make a payment in addition to the payments set out in the agreement,

    - a statement to that effect,

    - a description of the circumstances in which the amount may change or the additional payment may be required, including terms and methods of payment and

    - either, what the changed amount or the additional payment will be or the objective standard that will be applied to determine the changed amount or the additional payment, including terms and methods of payment.

  • Trade-In Details

    If the agreement includes a trade-in arrangement, a description of the trade-in arrangement and the amount of the trade-in allowance.

  • Currency

    The currency in which amounts are expressed, if it is not Canadian currency.

  • Consequences of Non-Payment

    The consequences of non-payment of any consumer amount.

  • Consumer Information Statement [CP Reg 26(2,3)]

    The following statement:

    - "which shall be in at least 10 point type, except for the heading which shall be in at least 12 point bold type', and

    - "which shall appear on the first page of the agreement, unless there is a notice on the first page of the agreement in at least 12 point bold type indicating where in the agreement the statement appears":

    ----------------------------------------------------------- Your Rights under the Consumer Protection Act, 2002

    You may cancel this agreement at any time during the period that ends ten (10) days after the day you receive a written copy of the agreement. You do not need to give the supplier a reason for cancelling during this 10-day period. If the supplier does not make delivery within 30 days after the delivery date specified in this agreement or if the supplier does not begin performance of his, her or its obligations within 30 days after the commencement date specified in this agreement, you may cancel this agreement at any time before delivery or commencement of performance. You lose the right to cancel if, after the 30-day period has expired, you agree to accept delivery or authorize commencement of performance.

    If the delivery date or commencement date is not specified in this agreement and the supplier does not deliver or commence performance within 30 days after the date this agreement is entered into, you may cancel this agreement at any time before delivery or commencement of performance. You lose the right to cancel if, after the 30-day period has expired, you agree to accept delivery or authorize commencement of performance.

    In addition, there are other grounds that allow you to cancel this agreement. You may also have other rights, duties and remedies at law. For more information, you may contact the Ministry of Consumer and Business Services. To cancel this agreement, you must give notice of cancellation to the supplier, at the address set out in the agreement, by any means that allows you to prove the date on which you gave notice. If no address is set out in the agreement, use any address of the supplier that is on record with the Government of Ontario or the Government of Canada or is known by you. If you cancel this agreement, the supplier has fifteen (15) days to refund any payment you have made and return to you all goods delivered under a trade-in arrangement (or refund an amount equal to the trade-in allowance).
    -----------------------------------------------------------

  • Additional Consumer Information Statement If Consumer Entitlement to Goods

    -----------------------------------------------------------
    If the supplier requests in writing repossession of any goods that came into your possession under the agreement, you must return the goods to the supplier?s address or allow one of the following persons to repossess the goods at your address:

    The supplier. A person designated in writing by the supplier.

    If you cancel this agreement, you must take reasonable care of any goods that came into your possession under the agreement until one of the following happens:

    The supplier repossesses the goods. The supplier has been given a reasonable opportunity to repossess the goods and twenty-one (21) days have passed since the agreement was cancelled. You return the goods.

    The supplier directs you in writing to destroy the goods and you do so in accordance with the supplier?s instructions.
    -----------------------------------------------------------
General requirements for disclosure are explained at this link:

General Disclosure Requirements


3. Early Consumer Cancellation of Consumer Agreement

The consumer has the right (without reason) to cancel the consumer agreement anytime from execution to 10 days after the date that they receive a written copy of the consumer agreement [CPA 28(1)].

Further, where the consumer has not yet received a copy of the consumer agreement that complies with the content and disclosure requirements of s.2 above, they have the right to cancel the consumer agreement within one year from it's execution [CPA 28(2)]. Technically, this cancellation right appears to accrue where even minor or immaterial non-compliance exists within a delivered consumer agreement - without the need for the consumer to request correction or amendment - though many courts may resist such a result unless the non-compliance is material to the consumer's interests (ie. unless the non-compliance 'matters').

These consumer cancellation rights are available even though the 'vacation club' consumer agreement is combined with a credit card consumer agreement. It is not uncommon for one consumer agreement to be subject to multiple forms of CPA regulation, and in such cases the general rule is that they are subject to ALL such regulation unless specifically excepted [on this topic see Part C, Ch.4: CPA Rule Conflict Resolution - but don't forget, when examining these rule conflict provisions that 'vacation clubs' technically fall within the definition of 'time shares'].


4. Amendment, Renewal and Extension Regardless of Related Consumer Agreement Terms

(a) Overview

Vacation club agreements may be amended, renewed or extended in accordance with the following requirements, regardless of whether the original agreement provides for such changes or not [CP Reg 41(1)]. The procedures set out below do not exclude amendment, renewal or extension in accordance with the terms of the consumer agreement - they only provide a method that can be used by either party.

This limitation prevents these provisions from being used to address situations of unilateral change dictated by the supplier when they are grounded in contractual terms (such as variation of 'points' redeemability). However where the consumer agreement is silent about amendment, renewal or extension procedures, these would apply unless the parties agree otherwise outside of the contract.

(b) Amendment, Renewal or Extension Requirements

These requirements are that [CP Reg 41(2)]:
  • the supplier or the consumer makes a proposal for amendment, renewal or extension;

  • the other party explicitly accepts the proposal. Mere acknowledgement of receipt of the proposal does not constitute acceptance [CP Reg 41(3)];

    and

  • the supplier provides disclosure to the consumer updating the applicable original disclosure information required (as per see s.2 above). This requirement applies even if the proposal to amend, renew or extend was from the consumer.
(c) Effective Date

Any amendment, renewal or extension so made is effective on the date set out in the proposal, but only IF the proposing party "provides a written copy of an updated version of the agreement to the consumer within 45 days after" they have agreed to the proposal [CP Reg 41(4)]. The agreement cannot effect party rights prior to the effective date [CP Reg 41(5)].

(d) Early Consumer Cancellation Rights Renewed for Vacation Clubs

An amendment, renewal or extension made in accordance with these procedures also renews the consumer's right to one form of early cancellation of the consumer agreement (see s.3 above) [CP Reg 41(6)]. This right, respecting the original making of the consumer agreement, is available - without reason - from the date that the consumer agreement commences and then up to 10 days after a copy of the consumer agreement is delivered to the consumer.

Logically, this 'new' cancellation right runs from the date that the proposal is accepted and then up to 10 days after the date that the supplier delivers the updated consumer agreement to the consumer.

The other cancellation right discussed in s.3, that is available for a year after the agreement is executed if the supplier fails to deliver a CPA-compliant copy of the consumer agreement, is NOT renewed on amendment, renewal or extension of the consumer agreement.

(e) Original 'Form' of Vacation Club Agreement Preserved

Despite having been amended, renewed or extended in accordance with these rules in a manner that would otherwise change its original characterization as a vacation club agreement, the agreements retains its original status [CP Reg 43].

This provision avoids the invocation of rules that apply to different 'forms' of consumer agreements as explained in Part C, Ch.3: "CPA Forms of Consumer Agreement". Without this provision, the particular manner of amendment, renewal or extension could subject the arrangement to new rules, and even potential conflict between rules as is discussed in Ch.4 "Rule Conflict Resolution".


5. Remedies

(a) Overview

In addition to the common law law remedies of tort, contract and restitution [discussed in Part A], CPA civil court remedies fall into three categories: 'general', 'sector-specific' (ie. those specific to the 'vacation club' sector), and 'unfair practices'.

Non-compliance with any of the general consumer rights [see Part C, Ch.5: "General Consumer Rights"] or with most of the sector-specific rights set out in this chapter can usually be addressed using the general remedies explained in Ch.7 ["CPA General Civil Remedies"]. These are summarized in (b) below. Additionally, some 'vacation club'-specific early cancellation rights are addressed in (c) below.

Where (as will commonly be the case), a vacation club agreement is associated with a credit card agreement, the cancellation, rescission and restitution remedies discussed in (b) and (c) below will often amount to little more than the termination of the credit card account and the payment of any final bill by the consumer. However where the consumer alleges that CPA non-compliance has denied the consumer an entitlement (eg. an air miles benefit) then the remedy likely falls under both the common law and the CPA restitution civil remedies.

Any 'unfair practice' provisions (which deal primarily with 'false, misleading or deceptive' and unconscionable representations) which may have specific relevance to vacation clubs are set out in (d) below.

As for non-civil court remedies, the CPA provides for a range of administrative Orders [see Part C, Ch.8: "Administrative Enforcement"] and regulatory prosecutions [see Part C, Ch.9: Prosecutions], neither of which are aggressively pursued by the Ministry of Consumer Services or the Director of the Consumer Protection Branch.

(b) General CPA Civil Remedies

. Overview

This is a summary of the general civil remedies available to consumers under the CPA. The full version of this discussion is at Part C, Ch.7: "General Civil Remedies".

These remedial provisions apply to violations of general CPA consumer rights such as illegal charges and prohibitions against negative-option contract formation [see Part C, Ch.5: "General Consumer Rights"] - and as well to non-compliance with most of the sector-specific rights set out in this chapter.

. Rescission

Typically, supplier (here 'repairer') non-compliance with any CPA right allows the consumer to cancel the consumer agreement at their election, on the delivery of a Notice of Cancellation to the supplier. Consumer-issued notice procedures are discussed in Part C, Ch.7, s.7: "CPA Civil Remedies: Consumer-Issued Notice Procedures".

However the form of cancellation (properly: 'rescission') used in the CPA does not just end the consumer's duties under the consumer agreement from the date of cancellation and then forward into the future. Rather the cancellation or rescission is 'ab initio' ('from the beginning' of the consumer agreement).

. Restitution

This form of 'ab initio' cancellation then necessitates that both parties, consumer and supplier alike, engage in post-cancellation restitution to each other respecting all that has passed between them since the consumer agreement commenced. Typically this involves the return of goods by the consumer and the return of monies paid by the supplier. In the case of past services performed or perishable goods typically a value compensation provision is imposed on the consumer.

Consumer restitution duties are sometimes complex, so readers should be sure to review carefully both sections 5 and 6 in Part C, Ch.7 "General Civil Remedies".

From the point that Notice of Cancellation is delivered, both parties are under specific timelines to complete their specific restitution duties.

. Right of Civil Action

Failure of a party to fulfil their restitution duties in the time required then automatically triggers a right of civil action in the aggrieved parties (the original Notice of Cancellation doubling as a de facto 'demand' notice). Most such claims will be suited to the Small Claims Court with its newly-raised $25,000 monetary jurisdiction, and parallel jurisdiction over the return of chattel property to the same dollar value.

Civil action is also a possibility in some cases where the consumer has not rescinded the consumer agreement fully, for example with the case of illegal charges. In that case there is still a 'Notice' requirement, but after the failure of the supplier to refund the monies the consumer can sue.

. Special Remedies Where Payments Made by Credit Card

Further, where consumer payments which are now subject to restitution were originally made by credit card, the consumer has a 'back up' right to demand, and then proceed in court, against the credit card issuer should the supplier remain in default of their restitution duties.

This provision will have little application to the common situation where vacation club agreements are combined with credit card agreements, as the supplier in that case is the credit card company directly. The provision is meant to apply to other vacation club situations where payments may have been made by the consumer using a credit card, typically as a matter of convenience.

. Common Law Right of Action Preserved

The CPA rights of action do not prohibit use of common law remedies in tort, contract and restitution and claims may (and when called for, should) be advanced both under the CPA and common law causes of action.

(c) Sector-Specific Remedies

Added to the general remedies discussed above are the two sector-specific remedies of consumer cancellation explained in s.3 above, one of which (the '10-day cooling-off period' cancellation) also applies in the case of amendment, renewal or extension as is discussed in s.4, above.

Use of these cancellation remedies will trigger the restitution consequences discussed in (b).

(d) Unfair Practices

'Unfair practices' are discussed at length in Part C, Ch.6. They primarily address 'false, misleading or deceptive' and unconscionable representations.

Specific 'unfair practices' which may relate to vacation clubs include:
  • False or Misleading Representation Re Quality of Goods or Services

    "A representation that the goods or services are of a particular standard, quality, grade, style or model, if they are not."

    This category resembles certain 'conditions and warranties' implied into consumer agreements by the CPA, and as well some imported into the CPA from the Sales of Goods Act. These are discussed in Part C, Ch.5, s.3: "General Consumer Rights: Warranties and Conditions Preserved".

  • False or Misleading Representation Re Reason for Availability of Goods or Services

    "A representation that the goods or services are available for a reason that does not exist."

    A fact example of this might be a false or misleading representation that a certain travel oppourtunity was available when it wasn't, or when it was unduly restricted in it's availability.

  • Deceptive or Negligent Representation Re Availability of Goods or Services

    "A representation that the goods or services or any part of them are available or can be delivered or performed when the person making the representation knows or ought to know they are not available or cannot be delivered or performed'"

    This addresses situations where people offer goods or services that are not available in order to get a sale now, and then come up with delaying excuses later. In light of the next-following example, this one must refer to the COMPLETE unavailability (that even waiting won't fix) of the goods or services.

  • False or Misleading Representation Re Timing of Availability

    "A representation that the goods or services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time."

  • False or Misleading Representation Re Price Advantage

    "A representation that a specific price advantage exists, if it does not."

    A fact example of this would be a false or misleading representation that the goods or services are 'discounted' (ie. points-reduced), when they are not.

  • False or Misleading Representation Re Material Facts

    "A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive."

    A 'material fact' is one which is pivotal to your decision to make a purchase.

  • Misrepresentation Re Purpose of Charge

    "A representation that misrepresents the purpose of any charge or proposed charge."

    This category both includes and exceeds the making of a charge for a good or service that was simply not provided (ie. simple mistake or fraud). Were it so limited, simpler language such as a "charge for a good or service not provided" would have sufficed.

    It may include attempts by unscrupulous suppliers to impose 'extra charges' on top of the principal amount negotiated for, in a bald attempt to squeeze more money out of the consumer. They usually have banal characterizations such as 'transaction fees', 'administration fees', etc where no significant or unusual reason exists to justify such charges.

6. Exemptions

(a) Payday Loans

I can't imagine how a vacation club agreement could also meet the definition of a "payday loan", but payday loans are listed as exempt from the provisions discussed in this chapter [CP Reg 9(3)].

I plan to do a separate Legal Guide for payday loans, which will be included in Part B of this Isthatlegal.ca Consumer Law Guide. In the meantime, readers may want to consult the Payday Loans Act directly.

Payday Loans Act

(b) Real Estate Purchase, Sales and Lease Agreements

While real estate purchase, sales and lease agreements are generally exempt from the CPA, vacation club agreements, to the extent that they involve any such real estate transactions, ARE subject to both the rules set out in this chapter and the general CPA rules set out in Part C [CPA 2(2)(f)].

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