Difference between revisions of "Contracts Overview"
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Contracts that a consumer makes with one business, such as a merchant or a lender, are sometimes sold to other parties. For example, an appliance store may sell a consumer finance contract to a bank or finance company. The sale of the contract is called “assigning the contract”. In general, the party who buys the contract has all the rights to collect on it that the original party had. | Contracts that a consumer makes with one business, such as a merchant or a lender, are sometimes sold to other parties. For example, an appliance store may sell a consumer finance contract to a bank or finance company. The sale of the contract is called “assigning the contract”. In general, the party who buys the contract has all the rights to collect on it that the original party had. | ||
In the past, the party buying the contract wanted to limit the responsibility it had for any problems arising from the performance of the contract (for example, if the merchandise financed was defective). One way to do this was to have the consumer agree to a clause in the contract that they would not raise certain defences against the party who bought the contract (called the “assignee”). This was called a ''' | In the past, the party buying the contract wanted to limit the responsibility it had for any problems arising from the performance of the contract (for example, if the merchandise financed was defective). One way to do this was to have the consumer agree to a clause in the contract that they would not raise certain defences against the party who bought the contract (called the “assignee”). This was called a '''cut-off clause''' because it tried to cut off rights the consumer may have had before the contract was assigned. | ||
Consumers are now protected against cut-off clauses in certain types of consumer contracts. For contracts governed by the ''Business Practices and Consumer Protection Act'', the law specifically says that consumers have the same rights against an assignee as against the original party who assigned the contract (called the “assignor”). The same protections apply for promissory notes (enforceable promises to repay a debt or loan) governed by the federal ''Bills of Exchange Act''. | Consumers are now protected against cut-off clauses in certain types of consumer contracts. For contracts governed by the ''Business Practices and Consumer Protection Act'', the law specifically says that consumers have the same rights against an assignee as against the original party who assigned the contract (called the “assignor”). The same protections apply for promissory notes (enforceable promises to repay a debt or loan) governed by the federal ''Bills of Exchange Act''. | ||
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==== Contract warranties==== | ==== Contract warranties==== | ||
The word '''warranty''' has at least two very different meanings in law. To consumers, it usually means a contractual promise that a seller makes about the quality of the goods or services sold. Under the law, a warranty is a broad label given to terms of a contract that are the non-essential terms of the contract. Sometimes the parties specifically define which terms are contract warranties, and sometimes the law (for example, the | The word '''warranty''' has at least two very different meanings in law. To consumers, it usually means a contractual promise that a seller makes about the quality of the goods or services sold. Under the law, a warranty is a broad label given to terms of a contract that are the non-essential terms of the contract. Sometimes the parties specifically define which terms are contract warranties, and sometimes the law (for example, the ''Sale of Goods Act'') implies which terms are contract warranties. More likely, the contract is silent on categorizing terms in this manner. | ||
This broad categorization can be important when there is a breach of the contract, as there are different remedies for breaches of contract warranties, as distinguished from other types of contract terms (such as contract conditions, discussed above). This is explained in the section on Contract Remedies. | This broad categorization can be important when there is a breach of the contract, as there are different remedies for breaches of contract warranties, as distinguished from other types of contract terms (such as contract conditions, discussed above). This is explained in the section on Contract Remedies. | ||
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Even if a '''waiver clause''' is not specifically prohibited, consumers may still be able to obtain a remedy for breach of contract if a fundamental aspect of the contract is breached. This issue can arise, for example, in sale of goods transactions governed by the ''Sale of Goods Act''. While consumers cannot waive their rights under that Act in the purchase of new goods, the rights can be waived in the purchase of used goods when those goods are purchased from retail businesses. | Even if a '''waiver clause''' is not specifically prohibited, consumers may still be able to obtain a remedy for breach of contract if a fundamental aspect of the contract is breached. This issue can arise, for example, in sale of goods transactions governed by the ''Sale of Goods Act''. While consumers cannot waive their rights under that Act in the purchase of new goods, the rights can be waived in the purchase of used goods when those goods are purchased from retail businesses. | ||
The issue most often arises in the sale of used cars. Invariably, a car dealer’s sale contract has a waiver clause. The courts have said in a number of decisions that if the problem with the car is fundamental, the waiver of rights term in the contract will be interpreted very strictly against the seller. Often, the courts ignore the waiver clause and give the consumer a remedy. (See the section on Contract Remedies.) One of the leading cases applying this principle is [http://canlii.ca/t/gbmfq Findlay v. Couldwell] (for more on this case, see the section on Unfair or Deceptive Practices). | The issue most often arises in the sale of used cars. Invariably, a car dealer’s sale contract has a waiver clause. The courts have said in a number of decisions that if the problem with the car is fundamental, the waiver of rights term in the contract will be interpreted very strictly against the seller. Often, the courts ignore the waiver clause and give the consumer a remedy. (See the section on Contract Remedies.) One of the leading cases applying this principle is [http://canlii.ca/t/gbmfq Findlay v. Couldwell] (for more on this case, see the section on Unfair or Deceptive Practices). | ||