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Consumer Protection from Deceptive and Unconscionable Acts (11:IV) (view source)

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A consumer transaction is a dealing that:
A consumer transaction is a dealing that:
*a) involves a supply of goods, services, membership in a club or organization, or real property by a supplier to a consumer, '''or'''
*a) involves a supply of goods, services, or real property by a supplier to a consumer for primarily personal, family or household purposes, '''or'''
*b) is a solicitation or promotion by a “supplier” with respect to the above mentioned transaction; '''and''' is for purposes that are primarily personal, family, or household.  
*b) is a solicitation, offer, advertisement or promotion by a supplier with respect to the above mentioned types of transactions.  


Except in Parts 4 and 5 of the ''BPCPA'', a consumer transaction includes a solicitation of a consumer by a supplier for a contribution of money or other property by the consumer.
Except in Parts 4 and 5 of the ''BPCPA'', a consumer transaction includes a solicitation of a consumer by a supplier for a contribution of money or other property by the consumer.


The Act '''does not''' apply to securities as defined by the ''Securities Act'', RSBC 1996, c 418 or contracts of insurance under the ''Insurance Act'', RSBC 1996, c 226.  
The Act '''does not''' apply to securities as defined by the ''Securities Act'', RSBC 1996, c 418 or contracts of insurance under the ''Insurance Act'', RSBC 1996, c 226.


=== 2. Consumer ===
=== 2. Consumer ===
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A supplier also includes the successor to, or assignee of, any rights or obligations of the supplier and, except in Parts 3 to 5, includes a  person who solicits a consumer for a contribution of money or other property.  
A supplier also includes the successor to, or assignee of, any rights or obligations of the supplier and, except in Parts 3 to 5, includes a  person who solicits a consumer for a contribution of money or other property.  


The definition of supplier in section 1 requires that the transaction occur “in the course of the supplier’s business”. Thus, private sales and transactions made by people who are not in the business of dealing with such goods are generally exempt from the ''BPCPA''. If a consumer buys  a used car advertised in a newspaper ad placed by a private person, the consumer will likely be restricted to the remedies found in the SGA or  at common law. Some remedies in the ''SGA'' are also available only when goods are sold in the ordinary course of business.  
The definition of supplier in section 1 requires that the transaction occur “in the course of business”. Thus, private sales and transactions made by people who are not in the business of dealing with such goods are generally exempt from the ''BPCPA''. If a consumer buys  a used car advertised in a newspaper ad placed by a private person, the consumer will likely be restricted to the remedies found in the SGA or  at common law. Some remedies in the ''SGA'' are also available only when goods are sold in the ordinary course of business.  


Several suppliers can be involved in one transaction. Therefore, in order for the consumer to sue, he or she need not have a contract with the  supplier who made a deceptive representation or committed an unconscionable act. For example, a consumer buys a car from a dealer and the contract is assigned to a financial institution. The vendor would be a supplier, as would the finance company attempting to collect on the  contract (see section 15). Since privity of contract is not necessary, each of the suppliers would be liable under the ''BPCPA'' if they engaged in deceptive or unconscionable practices.  
Several suppliers can be involved in one transaction. Therefore, in order for the consumer to sue, he or she need not have a contract with the  supplier who made a deceptive representation or committed an unconscionable act. For example, a consumer buys a car from a dealer and the contract is assigned to a financial institution. The vendor would be a supplier, as would the finance company attempting to collect on the  contract (see section 15). Since privity of contract is not necessary, each of the suppliers would be liable under the ''BPCPA'' if they engaged in deceptive or unconscionable practices.  


According to section 6, advertisers who, on behalf of another supplier, publish a deceptive or misleading advertisement are not liable for damages, court actions, or offences, if they are acting in good faith when they accept advertisements for publication. If, however, they knew or ought to have known that the advertisement had the capability, tendency, or effect of deceiving or misleading, then they too may be liable as a supplier under the ''BPCPA''.  
According to section 6(2), advertisers who, on behalf of another supplier, publish a deceptive or misleading advertisement are not liable for damages, court actions, or offences, if they are acting in good faith when they accept advertisements for publication. If, however, they knew or ought to have known that the advertisement had the capability, tendency, or effect of deceiving or misleading, then they too may be liable as a supplier under the ''BPCPA''.


== B. Defining a “Deceptive or Unconscionable Act or Practice” ==
== B. Defining a “Deceptive or Unconscionable Act or Practice” ==
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If a certain practice is not listed in 4(3), it may still be considered deceptive. The term “deceptive act or practice” was also found in BC’s old ''Trade Practices Act'', which was repealed by the ''BPCPA'' in 2004. Thus, looking back at the old Trade Practice Act jurisprudence can shed light on the meaning of “deceptive act or practice.”
If a certain practice is not listed in 4(3), it may still be considered deceptive. The term “deceptive act or practice” was also found in BC’s old ''Trade Practices Act'', which was repealed by the ''BPCPA'' in 2004. Thus, looking back at the old Trade Practice Act jurisprudence can shed light on the meaning of “deceptive act or practice.”


The term was interpreted by the court in Director of ''Trade Practices v. Household Finance Corporation'', [1976] 3 W.W.R. 731 (B.C.S.C.) [Household Finance]. To be considered deceptive, it is not necessary that the consumer actually be deceived or misled so long as the act or practice has the “capability, tendency or effect of deceiving or misleading a person”. Such an act may occur before, during or after the transaction.
The term was interpreted by the court in ''British Columbia (Director of Trade Practices) v Household Finance Corp'', [1976] 3 WWR 731, [1976] BCJ No 1316 (SC) at paras 19-23 [''Household Finance''] and later affirmed by the BC Court of Appeal. Household Finance suggests that a practice is deceptive for purposes of the BPCPA if it causes the consumer to commit an error of judgment.
 
''Household Finance'' suggests that a practice is deceptive for purposes of the ''BPCPA'' if it causes the consumer to commit an error in judgment.  


A plaintiff consumer relying on the supplier’s deceptive practice for an action should show:  
A plaintiff consumer relying on the supplier’s deceptive practice for an action should show:  
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The Director need only show that a deceptive practice would tend to cause consumers to make an error in judgment, but does not need to show that any consumer made an error in judgment, to enforce the Act against a supplier.  
The Director need only show that a deceptive practice would tend to cause consumers to make an error in judgment, but does not need to show that any consumer made an error in judgment, to enforce the Act against a supplier.  


It is not necessary that there be any deliberate intention to deceive for a practice or act to be deceptive (''Findlay v. Couldwell'' (1976), 5 W.W.R. 340).
The ''BPCPA'', similarly to the ''Trade Practices Act'', should be interpreted as imposing “a high standard of candour, especially on suppliers who choose to commend their wares” (''Rushak v Henneken'', [1991] 6 WWR 596, [1991] BCJ No 2692 (CA) at para 17 [''Rushak'']).
Where there is an embellishing endorsement of the goods, and the supplier knows the goods may be defective in an important respect, these facts must be disclosed. For the consumer to set aside the consumer transaction on the basis that the supplier engaged in a deceptive act or practice, the representation must be material – what is material depends on the individual circumstances of the transaction (''Rushak'').  


The ''BPCPA'', similarly to the ''Trade Practices Act'', should be interpreted as imposing a high standard of “candour, especially on suppliers who choose to commend their wares” (''Rushak v. Henneken'', [1991] BCJ No 2692 (CA) (QL) [''Rushak'']). Where there is an embellishing endorsement of the goods, and the supplier knows the goods may be defective in an important respect, these facts must be disclosed (''Rushak'', above). For the consumer to set aside the consumer transaction on the basis that the supplier engaged in a deceptive act or practice, the representation must be material – what is material depends on the individual circumstances of the transaction (''Rushak v Henneken'', [1986]  BCJ No 3072 (SC)).
The court may draw the conclusion that a practice is deceptive on the basis of vague contractual language in circumstances where that language allowed the supplier to claim that additional work was not part of the original contract: see ''British  Columbia (Director of Trade Practices) v Van City Construction Ltd'', [1999] BCJ No 2033 (SC) (QL).
 
The court may draw the conclusion that a practice is deceptive on the basis of vague contractual language in circumstances where that language allowed the supplier to claim that additional work was not part of the original contract: see ''British  Columbia (Director of Trade Practices) v Van City Construction'', [1999] BCJ No 2033.


=== 2. Unconscionable Acts ===
=== 2. Unconscionable Acts ===
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Under s 9(2), if it is alleged that a supplier committed or engaged in an unconscionable act or practice, the burden of proof is on the supplier to show that the unconscionable act or practice was not committed.  
Under s 9(2), if it is alleged that a supplier committed or engaged in an unconscionable act or practice, the burden of proof is on the supplier to show that the unconscionable act or practice was not committed.  


'''NOTE:''' As above, s 8(3) sets out a list of circumstances that the court must consider when determining whether a practice is unconscionable. Again, this list is not comprehensive, as the court must consider all of the surrounding circumstances of which the supplier knew or ought to have known.  
:'''NOTE:''' As above, s 8(3) sets out a list of circumstances that the court must consider when determining whether a practice is unconscionable. Again, this list is not comprehensive, as the court must consider all of the surrounding circumstances of which the supplier knew or ought to have known.  


== C. Remedies and Sanctions ==
== C. Remedies and Sanctions ==
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=== 3. Bait and Switch ===
=== 3. Bait and Switch ===
If a business advertises a sale, it must stock a reasonable quantity of the item (''Competition Acts'' 74.04). The bait and switch tactic  occurs when a business advertises an item at a bargain price to attract customers but, having no intention of selling the item, does not  adequately stock it. Rather, the business intends to use sale pressure to get customers to buy other, higher-priced items.  
If a business advertises a sale, it must stock a reasonable quantity of the item (''Competition Act'' s 74.04(2)). The bait and switch tactic  occurs when a business advertises an item at a bargain price to attract customers but, having no intention of selling the item, does not  adequately stock it. Rather, the business intends to use sale pressure to get customers to buy other, higher-priced items.  


If the business does not have adequate stock of a sale item, it must issue rain cheques. Rain cheques are not required, however, if the advertisement states “while quantities last”.  
If the business does not have adequate stock of a sale item, it must issue rain cheques. Rain cheques are not required, however, if the advertisement states “while quantities last”.  


Advertisers who violate this section may be subject to an administrative penalty (s 74.1). A business may avoid penalties stemming from bait and switch tactics if it attempted to supply more of an item than it was able to, if demand for the item was greater than expected, or if the advertisement stated that the sale price was good “while supplies last”.  
Advertisers who violate this section may be subject to an administrative penalty (s 74.1). A business may avoid penalties stemming from bait and switch tactics if it attempted to supply more of an item than it was able to, if demand for the item was greater than expected, or if the advertisement stated that the sale price was good “while supplies last”.


== G. False or Misleading Advertising ==
== G. False or Misleading Advertising ==
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=== 1. The Common Law ===
=== 1. The Common Law ===


Despite the breadth of the BPCPA,  it  does  not  provide remedies  for  all  contractual situations.Before commercial legislation (SGA) or consumer protection acts (BPCPA), the common law provided remedies for misrepresentation. a)Fraudulent Misrepresentation Fraudulent misrepresentation occurs when the vendor knowingly makes a false statement of fact that is material to the contract and the statement  serves as an inducement to enter the contract. The buyer may be awarded the common law remedy of rescission and can also sue for damages in the tort of deceit. Breaches of contract  damages, such as the expectation of profit, are not available, because a party cannot claim for the contract to be rescinded and, at the same time claim that the contract exists for the purposes of claiming damages. b)Innocent Misrepresentation An innocent misrepresentation arises when a representation of fact is false, material to   the   contract,   and   the   buyer   is   induced   to   enter   the  contract   by   the representation. Unlike fraudulent misrepresentation, though the representation is not known to be false. The remedy, which is  an equitable remedy, is rescission, which attempts to put the parties back in the position they were in before the contract.  A misrepresentation might also be considered to be a term of the contract or as a term in a collateral contract. In this situation, the client can sue for damages if the misrepresentation ends up being untrue.  For the remedy of rescission, there could be several possible bars: i)third party rights have arisen; ii)an undue delay occurred since the misrepresentation; iii)the contract has been executed (not an absolute bar);  iv)the contract has been affirmed by the aggrieved party; or  v)it is impossible for the courts to undo the contract.c)Negligent Misrepresentation Negligent     misrepresentation     operates     in     the     same     way     as   innocent misrepresentation, but it arises when the representation is made negligently  as opposed to in a completely innocent manner. As with innocent misrepresentation,  
Despite the breadth of the ''BPCPA'',  it  does  not  provide remedies  for  all  contractual situations. Before commercial legislation (''SGA'') or consumer protection acts (''BPCPA''), the common law provided remedies for misrepresentation.  
11-25the  remedy is rescission. Hedley Bryne v Heller (1964),  AC  465  is one example of a case involving negligent misrepresentation.
 
==== a) Fraudulent Misrepresentation ====
 
Fraudulent misrepresentation occurs when the vendor knowingly makes a false statement of fact that is material to the contract and the statement  serves as an inducement to enter the contract. The buyer may be awarded the common law remedy of rescission and can also sue for damages in the tort of deceit. Breaches of contract  damages, such as the expectation of profit, are not available, because a party cannot claim for the contract to be rescinded and, at the same time claim that the contract exists for the purposes of claiming damages.  
 
==== b) Innocent Misrepresentation ====
 
An innocent misrepresentation arises when a representation of fact is false, material to the contract, and the buyer is induced to enter the  contract by the representation. Unlike fraudulent misrepresentation, though the representation is not known to be false. The remedy, which is  an equitable remedy, is rescission, which attempts to put the parties back in the position they were in before the contract.   
 
A misrepresentation might also be considered to be a term of the contract or as a term in a collateral contract. In this situation, the client can sue for damages if the misrepresentation ends up being untrue.   
 
For the remedy of rescission, there could be several possible bars:  
*i) third party rights have arisen;  
*ii) an undue delay occurred since the misrepresentation;  
*iii) the contract has been executed (not an absolute bar);   
*iv) the contract has been affirmed by the aggrieved party; or   
*v) it is impossible for the courts to undo the contract.
 
==== c) Negligent Misrepresentation ====
 
Negligent misrepresentation operates in the same way as innocent misrepresentation, but it arises when the representation is made negligently  as opposed to in a completely innocent manner. As with innocent misrepresentation, the remedy is rescission. ''Hedley Bryne & Co Ltd v Heller and Partners Ltd'', [1961] 3 All ER 891 (HL) is one example of a case involving negligent misrepresentation.
 


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