Here are seven things to know before signing a product-service contract that might save you thousands of dollars.
The Consumer Protection Act (CPA)
The Consumer Protection Act (CPA) sets the rules about signing or cancelling a contract. Under the CPA, most agreements for a product or service that costs more than $50 must be in writing. The Consumer Protection Act specifies what should be included in a contract and how you may be able to cancel one.
Here are the highlights:
7 Things to know before signing a product-service contract
#1. Written contract for transactions of $50+
Under the CPA, you must get a written contract for transactions that cost more than $50 if:
- you purchase any product or service at home from a door-to-door salesperson
- you sign up for a membership (e.g. from a fitness club or buying club)
- you get a subscription (magazine, music, etc.)
- you hire a business or individual, like a general contractor or mover or snow removal services
This contract must contain all the details of the purchase and any credit terms you’ve agreed to. Always remember to read and understand the terms and conditions before signing.
Rules about contracts under the CPA
Contracts are different depending on their purpose. But under the Consumer Protection Act, all contracts must contain a few common details to make sure your rights are protected.
#2. Contract terms must be clearly stated
A contract must clearly show the terms of your agreement with the business. All fees and charges must be what they say they are. For example, a business may not add a $20 surcharge for a “tax” that does not exist. Make sure you understand what each charge is for and that it’s valid.
If your contract has a cooling-off period, the contract must mention this information. It must also include details on how they will deal with the cancellation if you change your mind within that time.
#3. Written estimates should be included in the contract – 10% rule
If a written estimate is included in the contract, the final price cannot be more than 10% above the estimate, unless you agree to a new price and sign a change to the contract. Make sure that any written estimate you receive is part of the contract, so that this 10% rule will apply.
If you are charged more than 10% above a written estimate without agreeing to it, you can demand that the final price be adjusted.
If a business refuses to adjust the price, you can file a complaint with the ServiceOntario.
#4. You have rights to seek help
Some businesses add clauses to a contract that say that you must use a private arbitration process to resolve complaints instead of going to court or seeking assistance from the Ministry of Government and Consumer Services. You are not bound by these clauses, even if you have accepted the agreement.
You always have the right to contact ServiceOntario or taking legal action.
#5. Credit terms must be fully presented
The contract must show all financing charges and the annual interest rate for any financing agreement with the business. It must also explain how any extra charges would be calculated if you failed to make the payments.
#6. You must be given a written notice about any changes to your contract
The business must provide you with written notice of any changes that they want to make to your contract. This includes renewing or extending it. They must also provide you with the option to not accept the changes to your contract.
Under the CPA, a written notice must include:
- all proposed changes to be made to the contract
- the date on which the change, renewal or extension would become effective
- how the consumer must respond to the notice (mail, email, fax, etc.)
- what would happen if the consumer failed to respond to the notice
#7. Any changes to your contract are invalid without your permission
If a business doesn’t follow these rules, any changes to your contract are invalid. You don’t have to pay for any charges or fees that are a result of invalid changes to your contract.
In these cases, you can write the business to ask for a correction or refund. If a business refused to correct the mistake, you can file a complaint with the Ministry of Government and Consumer Services.
Source: The Government of Ontario
By Carlos Perdomo