On June 16, 2009, the Quebec National Assembly (the “Assembly”) presented for deliberation Bill 60, An Act to Amend the Consumer Protection Act and Other Legislative Provisions.  Bill 60 would bring significant changes to the Consumer Protection Act (the “Act”), Quebec’s principal legislative vehicle for protecting the rights of consumers. Bill 60’s proposed changes, which have yet to go through the Assembly’s detailed review process and be enacted into law (deliberation resumes on September 15, 2009), would impact substantively on merchants carrying on business in Quebec.  The following are some of the changes that Bill 60 would bring to the legislative landscape if enacted.

General Consumer Contracts Involving the Sale of Goods and Services

Bill 60 provides consumers entering into general consumer contracts involving the sale of goods and services with a number of added protections.  Specifically, a stipulation enabling a merchant to amend unilaterally the terms of a consumer contract is prohibited unless the stipulation specifies the precise terms of the contract that may be amended unilaterally.  Merchants would also be required to provide consumers with at least 60 days prior notice of the nature of the amendment and the precise date on which the amendment will come into force.  The consumer may then refuse the amendment and cancel the contract without cost or penalty within 60 days after receiving the notice if the amendment entails an increase in the consumer’s obligations or a reduction in the merchant’s obligations.  Except in the case of a service contract for an indeterminate duration, a stipulation enabling a merchant to unilaterally amend a consumer contract would be prohibited outright if the proposed amendment implicates essential elements of the contract, such as the nature and price of the goods or services offered, or the term of the contract.

These changes may have significant effects on a merchant’s ability to unilaterally amend its website terms of use when transacting business over the Internet, specifically those terms governing the online sale or provision of goods and services to its customers.  Blanket stipulations to the effect that a merchant reserves the right to amend the terms and conditions of sale at any time without notice, or by simply posting the amended terms and conditions of sale on its website, would appear to run afoul of Bill 60.  So too would stipulations which reserve a merchant’s right to correct errors in pricing or product information and to modify the prices of products at any time without prior notice.  Merchants will, therefore, need to revise the terms and conditions governing the online sale of their goods and services in light of these added restrictions.

Contracts Involving Sequential Performance for a Service Provided at a Distance

Bill 60 provides a number of added protections for consumers entering into “contracts involving sequential performance for a service provided at a distance”.
 
If Bill 60 is enacted in its current form, any contractual stipulation providing for an automatic renewal under a contract whose term exceeds 60 days will be prohibited, unless the renewal is for an indeterminate term.  Merchants will also be required to inform consumers of the expiry date of the contracts by means of a written notice sent between the 90^th and 60^th day prior to the expiry date.

Bill 60 would also require merchants to disclose the total cost of the goods and services offered.  This provision appears intended to mitigate the likelihood that customers might otherwise be subject to fee increases for services that they may not want.  Such contracts would need to provide, among other information, a detailed description of each of the services to be provided under the contract, the monthly rate for such services, the description of any service offered as a premium, any optional services the consumer chooses to add to the services purchased, and the monthly rate for each of those optional services.  Merchants would also be prohibited from increasing fees during the life of the contract without the customer’s approval.

Bill 60 further provides a number of additional protections including placing a cap on cancellation indemnities based on the value of economic inducements given to the customer by the merchant, and would make it illegal for merchants to sell extended warranties before informing customers in detail what the manufacturer already offers by way of warranty protection.

Contracts for the Sale of Prepaid Cards

Bill 60 would put an end to expiry dates on prepaid gift certificates, gift cards, or similar media of exchange that are paid for in advance (“Prepaid Cards”).  This restriction is in keeping with similar legislative requirements enacted in other Canadian provinces, notably Ontario.  Any stipulation providing for an expiry date on a Prepaid Card would be prohibited unless the contract provides for an unlimited use of a service.  No charges may be levied against a consumer for the issuance or use of a Prepaid Card.  The merchant also bears a positive obligation to inform the consumer in writing of the conditions applicable to the use of the Prepaid Card and how the consumer may check the balance remaining on the Prepaid Card.  These new provisions will have far-reaching effects and impact a wide variety of retailers that offer Prepaid Cards to their customers.

It remains to be seen whether Bill 60 will be enacted in its present form or whether these additional obligations on merchants will be diluted or expanded.  We will continue to monitor Bill 60’s evolution in the Assembly and provide periodic updates as to the nature of Bill 60’s modifications to the legislative landscape.

If you would like additional information, please contact Justin D. Vineberg (514.841.6533) or Alain Murad (514.841.6487) in our Montréal office or Christopher D. Margison (416.367.5544) in our Toronto office.

Davies Ward Phillips & Vineberg LLP, with over 250 lawyers, practises nationally and internationally from offices in Toronto, Montréal, New York and an affiliate in Paris and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and overseas clients.

The information and comments herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstance. For particular applications of the law to specific situations, the reader should seek professional advice.