Bill 60, entitled “An Act to amend the Consumer Protection Act and other legislative provisions”, was presented by the Minister of Justice to the House of Commons for its first reading on June 16th, 2009. Bill 60 amends the Consumer Protection Act on a variety of points, including, without limitation, the introduction of new rules on contracts involving sequential performance, the sale of prepaid cards and the sale of additional warranties. The Bill also provides for modifications to the Travel Agents Act and the Act respecting prearranged funeral services.
Contracts involving Sequential Performance
Although many of the provisions proposed by Bill 60 which deal with contracts involving sequential performance are meant to address the many concerns of consumers in respect of cell phone and internet contracts, notably the cancellation fees imposed under such contracts and the automatic renewals without prior approval, it is noteworthy that the new provisions will apply to other types of contracts involving sequential performance. Unfortunately, neither Bill 60 nor the Consumer Protection Act defines the term “contract involving sequential performance” and thus there is some uncertainty as to how far reaching the new provisions will be.
Among the new rules on contracts involving sequential performances, Bill 60 introduces new provisions to address contracts involving sequential performance for a service provided at a distance, notably in response to complaints received by the Québec Consumer Protection Office in respect of cell phone and internet contracts. Among other things, the new provisions would require contracts involving sequential performance for a service provided at a distance (including contracts other than cell phone and internet contracts) to be evidenced in writing and to include prescribed information. They would also impose restrictions on automatic renewal of such contracts and allow consumers to cancel such contracts with important limitations on the cancellation indemnity that may be claimed.
Bill 60 proposes to introduce a number of provisions regarding prepaid cards, which are similar to those already found in many other Canadian provinces. The provisions in Bill 60 concerning the sale of prepaid cards apply to gift certificates, gift cards or any similar medium of exchange that is paid in advance by the consumer, but they do not apply to cards provided to consumers free of charge. The bill provides that the merchant must inform the consumer about the conditions applicable to the use of the prepaid card, as well as how to check the balance on the card, before the consumer enters into a contract for its purchase. The merchant must also ensure that the conditions applicable to the use of the prepaid card appear on it, or must provide the consumer with a copy of such conditions in writing. In addition, the bill includes rules prohibiting any stipulation for an expiry date on the prepaid card (unless the contract provides for unlimited use of a service), as well as any charges for the issue or use of such a card.
Bill 60 introduces a new clause establishing the conditions that apply to the sale of additional warranties, thereby complementing the present Act which is silent in this respect. The clause provides that before proposing to consumers the purchase of a conventional warranty on goods, the merchant must inform them, both orally and in writing, about the legal warranty to which consumers are entitled under Section 38 of the Act, in accordance with which goods are expected to last for a reasonable time depending on the terms of the contract. The merchant must also disclose to consumers the existence of any free warranty on goods, including the manufacturer’s warranty, and the object and duration of such warranty, although Bill 60 does not specify whether the disclosure must be made orally and/or in writing.
Other Proposed Amendments
Among the many other amendments proposed, Bill 60 proposes to require merchants to indicate in their consumer contracts which clauses are inapplicable in Québec (whether in law or otherwise) by preceding all such clauses with a statement to that effect.
Bill 60 also proposes to prohibit any clause requiring a consumer to pay a fixed amount or percentage of charges, penalties or damages (other than interest accrued) upon nonperformance of the consumer’s obligation. Such provision would have the effect of prohibiting penal clauses and liquidated damage clauses.