On December 2, 2009, the Québec National Assembly passed Bill 60 in an effort modernize the Québec Consumer Protection Act (the “CPA”). Bill 60, which came into force on June 30, 2010, imposes a number of new obligations on merchants operating in the province.

General Overview of Bill 60

Bill 60 introduces significant changes to the CPA by prohibiting the insertion of certain clauses in consumer contracts and by regulating the sale of prepaid cards, the sale of additional manufacturers warranties and contracts involving sequential performance for a service provided at a distance, such as cellular phone contracts. Additionally, taking a page from the travel industry in Quebec, Bill 60 allows the Quebec Government to establish funds to indemnify consumers in certain industries as a result of shutdowns in such industries.

Prohibited Stipulations in Consumer Contracts

The amended CPA now limits the ability of merchants unilaterally to amend or terminate consumer contracts. As a result, merchants may only unilaterally amend a contract if (i) the contract clearly indicates the elements of the contract that may be amended, (ii) merchants have provided advance notice of the amendment and (iii) the contract allows consumers either to refuse the amendment or to terminate the contract.

These have significant effects on a merchant’s ability to unilaterally amend its website terms of use when selling goods or services on-line.

Sale of Prepaid Cards

Bill 60 also regulates prepaid cards such as gift certificates or gift cards. Before finalizing the sale of a card, merchants must now inform consumers of any conditions applicable to the card, and explain to the consumer how to check the balance on the card. Further, a prepaid card cannot have an expiry date. Finally, consumers may not be charged for the issuance of a prepaid card, and may request a refund of any remaining balance under $5.

Changes to Contracts for Additional Warranties

The new legislation also impacts the sale of additional warranties offered by merchants in addition to existing warranties. Merchants must now, both orally and in writing, inform the consumer of the legal warranty provided under the CPA. Prior to the sale of an additional warranty, merchants must explain the nature and duration of the existing manufacturer’s warranty.

Contracts Involving Sequential Performance for Service Provided at a Distance

Bill 60 also provides a set of new rules specifically targeted at telecom, cable and internet service providers. Contracts with these providers must now be provided in writing, in a format specified by the Regulation, and include details such as:

  • a detailed description of the service or services to be provided under the contract;
  • the description of any service offered at a premium;
  • the term and expiry date of the contract;
  • the economic benefits given by the merchant for the consumer signing the contract, such as the rebate on the price charged for goods or services purchased or leased on signing the contract;
  • the total monthly amount payable by the consumer (with detailed monthly rate information); and
  • the circumstances under which the consumer may cancel the contract and the costs related to such a cancellation.

Furthermore, such contracts, if they are longer than two months, cannot contain an automatic renewal stipulation, unless the renewal is for an indeterminate term. Additionally, consumers may, at any time, cancel a contract by sending written notice to the merchant. Bill 60 also imposes limits on penalties and cancellation indemnities that may be imposed by merchants.

Finally, consumers cannot be made to pay for services of which they are deprived while the goods leased or sold to the consumer pursuant to the contract are under repair. This only applies where the goods are necessary for the service, such as cellular phones and where the goods are still under warranty.

These new rules are forcing merchants to change their commercial practices.

Businesses must bear in mind that some of these changes affect certain types of consumer contracts under the CPA while some affect all contracts. As a result, it is very important for businesses to review their current practices and contracts to ensure that they comply with these new requirements, especially merchants offering pre-paid cards and additional manufacturer’s warranties and telecom, cable and internet services providers.