On June 17, 2009, Bill 60, legislation to amend Quebec’s Consumer Protection Act, was tabled in the National Assembly by the province’s Justice Minister.

Some of the main amendments proposed in the Bill have to do with a merchant’s right to amend an existing contract, the creation of a new set of rules for “contracts involving sequential performance for a service provided at a distance”, and the sale of prepaid cards.

The proposed legislation would also create some new obligations relating to conventional warranties and would prohibit a merchant from stipulating in a contract that the consumer, on failing to perform the obligations in the contract, is to pay any charges, penalties or damages other than accrued interest. It would also put more teeth in the provisions relating to injunctions against prohibited practices and stipulations in consumer contracts, by providing that consumer advocacy bodies may, on certain conditions, apply for such injunctions.

UNILATERAL AMENDMENT/CANCELLATION BY THE MERCHANT

Irrespective of the type of commercial activity, merchants would not be permitted to amend a contact that has begun to run except on very specific conditions.

In the case of a fixed-term contract involving sequential performance, the merchant would not be allowed to reserve the right to cancel the contract during the term.

Amendment of contract by the merchant

Where a contract is made for a fixed term, unilateral amendment by the merchant of an essential element of the contract (nature of the goods or services, price, term of the contract) would be prohibited. Amendments to minor elements of a fixed-term contract would be permissible, as would amendments to indeterminate-term contracts (those without a term), subject to the following conditions in both cases:

  1. The merchant must have inserted a clause in the contract specifying which elements may be amended;
  2. The merchant must have inserted a clause in the contract providing for the merchant to notify the consumer in writing at least sixty days before an amendment is to come into force;
  3. The written notice must contain the new clause, or the amended clause as it reads now and as it formerly read, and the date the amendment is to come into force;
  4. The merchant must have inserted a clause in the contract confirming the consumer’s right to refuse the amendment and cancel the contract without cost or penalty, within sixty days after receiving the notice, if the amendment entails an increase in the consumer’s obligations or a reduction of the merchant’s obligations.

Any unilateral amendment by the merchant that does not meet these conditions could not be invoked against the consumer.

Cancellation of contract by the merchant

A merchant would not be able to include a clause in a fixed-term contract involving sequential performance reserving the right to cancel the contract.

For indeterminate-term contracts (those without a term), the merchant would be able to reserve the right to terminate the contract where it sees fit to do so, even where the consumer is not in default, but would have to notify the consumer in writing at least sixty days before the intended cancellation date.

SPECIAL NEW RULES FOR CONTRACTS INVOLVING SEQUENTIAL PERFORMANCE FOR A SERVICE PROVIDED AT A DISTANCE

These new rules focus primarily on contracts for the provision of telecommunications services, such as cellphone, cable or Internet service agreements. The main rules proposed in regard to such contracts would provide as follows:

Mandatory content of contract

The contract must include a description of any service offered as a premium, the value of the economic inducements given by the merchant in consideration of the contract (premiums or rebates on the price charged for goods or services purchased or leased, etc.), the term and expiry date of the contract, and the circumstances in which the consumer is allowed to rescind, cancel or amend the contract and, to the extent that same are lawful, the terms and costs associated with doing so. The contract must also indicate the formalities that must be fulfilled by the consumer in order to terminate the contract upon its expiry.

Prohibition on automatic renewal

Automatic renewal upon the expiry of a contract whose term exceeds sixty days is prohibited, unless the renewal is for an indeterminate term.

Cancellation by the consumer at any time

The consumer may cancel the contract at any time, at his or her discretion, by written notice to the merchant.

If the contract is cancelled because the merchant amended it unilaterally, no cancellation indemnity may be claimed from the consumer. In other cases, Bill 60 limits the indemnities or penalties that may be imposed on the consumer.

SALE OF PREPAID CARDS

This new section targets the sale of what are commonly referred to as gift certificates or gift cards and provides that the merchant, before concluding the sale, must disclose to the consumer all the conditions applicable to the use of a prepaid card, including how he or she can check the balance on the card. The information must appear on the card or in a document to be given to the consumer. In addition, the merchant may not impose an expiry date on a prepaid card, unless the contract provides for unlimited use of a service. Lastly, the consumer may not be charged for the issue or use of a prepaid card.

OTHER ADDITIONS

In accordance with the proposed amendments, a merchant wishing to propose that a consumer purchase a conventional warranty on goods would now have to inform the consumer orally and in writing of the legal warranty that attaches to every purchase.1 The merchant would also have to inform the consumer of the existence of any other free warranty, including the manufacturer’s warranty, specifying what it covers and its duration. Moreover, where a conventional warranty was invoked by a consumer, the merchant or manufacturer would not be able to require the consumer to prove that the previous owners of the goods had complied with the conditions of the warranty.

CONCLUSIONS

Before it becomes law, Bill 60 will most likely be the subject of consultation and review before a parliamentary committee, given the issues and concerns that it raises, in telecommunications and other areas alike. While many merchants will need to modify such commercial practices as the sale of warranties and gift certificates as a result of the proposed provisions, the greatest impact will come from the requirements for the wording of consumer contracts, as a number of clauses that were used in the past in contracts involving sequential performance will now be prohibited.