In the last month of 2023, Ontario’s Bill 142, Better for Consumers, Better for Businesses Act, 2023 received Royal Assent, which repeals the Consumer Protection Act, 2002 and replaces it with the new Consumer Protection Act, 2023 (“CPA 2023”). Notably, although the Bill was passed, CPA 2023 does not come into force until a date is set by proclamation of the Lieutenant Governor. While we await the official proclamation date of CPA 2023 and the publication of its new regulations, owners of businesses should begin contemplating the possible effects that CPA 2023 will have on their business agreements, terms and conditions, and general business practices, and implement changes as necessary.
Consumer contracts – What not to include
Section 14(1) of CPA 2023 sets out specific provisions that are strictly prohibited and cannot be included in consumer agreements:
(a) terms that require disputes arising out of the contract be submitted to arbitration or adjudicated by a court other than the Superior Court of Justice;
(b) terms that prevent the consumer from commencing or becoming a member of a class actions proceeding;
(c) terms that negate or vary any implied condition or warranty under the Sale of Goods Act or any deemed condition or warranty under CPA 2023;
(d) terms that place a monetary limit on the amount of any claim made by the consumer for breach of a condition or warranty under the Sale of Goods Act or any deemed condition or warranty under CPA 2023;
(e) terms that allow a supplier to acquire title to, possession of or any rights in any goods of the consumer, other than the goods passing to the consumer under the contract;
(f) terms that prevent a consumer from publishing or communicating a review of the supplier or of the goods or services supplied; and
(g) terms that prevent a consumer from filing a complaint with the Ministry or otherwise communicating with the Ministry.
Increase in penalties and consumers’ rights to rescind
Once CPA 2023 comes into force, any of the above-noted provisions that appear in a consumer agreement will be deemed unenforceable. Individuals and businesses found guilty of committing an offence under CPA 2023 will be subject to regulatory enforcement and penalties. CPA 2023 provides that any individual who fails to comply with or contravenes any order, direction or other requirement or provision under the Act or its regulations may be liable to a fine of not more than $100,000 or to imprisonment for a term of not more than two years less a day, or both. For a corporation, the fine would be not more than $500,000.
Furthermore, consumers will have the right to cancel any agreement that contains any of these terms within one year of entering into the agreement. Consumers will additionally have the right to rescind an agreement, whether written, oral, or implied, for one year after entering into it, if an unfair practice has occurred, whether the unfair practice occurred before, during or after the contract was entered into. The consumer may also be entitled to any remedy that is available in law, including damages.
Review your business practices and agreements
As we anticipate both the proclamation of the CPA 2023 and the publication of its regulations later this year, it would be wise to review the agreements and practices currently used in your business, to ensure compliance with CPA 2023.