Direct Sales, Future Performance, and Time Share Contracts (11:V)

Since the BPCPA has replaced the Consumer Protection Act, the BPCPA covers door-to-door sales, payday loans, credit cards, income tax refund services (although the federal Tax Rebating Discounting Act, RSC 1985, c T-3 regulates the actual amount which can be refunded), food plan contracts, unsolicited goods, and similar activities. The primary remedy for consumers in the BPCPA regarding these types of activities is the right to avoid or cease contracts for direct sale or for future services, after giving notice in the manner required by the statute. A single contract may fall under more than one category, and in that case, will attract the requirements and cancellation provisions of each applicable section.

NOTE: When exercising cancellation rights under the BPCPA consumers should be apprised of ss 27 and 28. In most cases, the contract is effectively rescinded by the cancellation; goods must be returned undamaged and payment must be refunded in full.

A. Direct Sales

When consumer is approached by a salesperson, instead of making a conscious decision to seek out a product or service, they may be taken unawares and can be vulnerable to being taken advantage of. The BPCPA recognizes this risk by imposing disclosure requirements and allowing a consumer to cancel the contract in ways the common law of contract does not permit.

A direct sales contract is defined in s. 17 as:

...a contract between a supplier and a consumer for the supply of goods or services that is entered into in person at a place other than the supplier's permanent place of business, but does not include any of the following:

• (a) a funeral contract, interment right contract or preneed cemetery or funeral services contract;
• (b) a contract for which the total price payable by the consumer, not including the total cost of credit, is less than an amount prescribed by regulation (an amount that has yet to be set at time of printing: cf. Business Practices and Consumer Protection Regulation, BC Reg. 294/2004);
• (c) a prepaid purchase card;

The BPCPA sets out a lengthy list of requirements under ss. 19 and 20 for the content of direct sales contracts, such as the name, address, and telephone number of the seller, the name (in a readable form) of the individual who signs the contract on behalf of the supplier, a detailed description of the goods or services to identify them with certainty, the price, and a detailed statement of the terms of payment. When credit is extended, there also needs to be a description of the subject matter of any security interest. This is not an exhaustive list; please consult the Act.

1. Right of Cancellation - Direct Sales

Under s 21 of the BPCPA,

• (a) the purchaser may cancel the contract within 10 days after receiving a copy of the contract. The purchaser need not offer explanations for his or her decision. The vendor then has 15 days after the date of cancellation to refund all money without deduction.
• (b) if a delivery date is specified in the contract and not all of the goods/services are delivered/performed within 30 days of this date, the purchaser may cancel the contract within one year after the date a copy of the contract was received, provided that the purchaser has not accepted or used the goods/services;
• (c) if the contract does not contain information required under s. 19 and 20(1) of the Act, the buyer may cancel within one year of the date of the contract. A direct sale is unenforceable by the seller if the buyer is required to make a down payment in excess of a prescribed amount (BPCPA, s 20(3)(b)).

NOTE: Whether the purchaser has accepted goods is determined by the definition in the Sale of Goods Act (s. 39).

The BPCPA does not make oral executory contracts unenforceable. However, s 20 requires that the seller deliver a written copy to the buyer at the time of signing, or the contract is not binding on the buyer.

Section 54 requires that the buyer provide notice of cancellation to the seller, and declares that it may be delivered by any method that permits the cancelling party to produce evidence that the contract was cancelled. Notice by registered mail, electronic mail, personal delivery, and fax is explicitly permitted. Nowhere does the BPCPA explicitly state that a notice of cancellation shall be in writing, but a buyer should be cautious and deliver written notice. The section explicitly permits that the notice can be given to the seller directly, or to the postal, fax, or electronic mail address of the seller shown in the contract. When a buyer rescinds a contract under s 21, that section also provides that the goods may be retained until all of the money paid is refunded.

In Woodward v International Exteriors (British Columbia) Ltd (1991), 53 BCLR (2d) 397, 1 BLR 254 (CA), verbal notice of termination of an agreement was sufficient for the consumer to terminate this form of contract. Note that verbal notice may not be sufficient in all instances and written notice remains advisable.

B. Future Performance Contracts

A future performance contract is defined in s 17 as:

...a contract between a supplier and a consumer for the supply of goods or services for which the supply or payment in full of the total price payable is not made at the time the contract is made or partly executed, but does not include:

• (a) a contract for which the total price payable by the consumer, not including the total cost of credit, is less than a prescribed amount, (currently no amount has been so prescribed);
• (b) a contract for the supply of goods or services under a credit agreement, as defined in s. 57 (definitions), if the goods or services have been supplied; or,
• (c) a time share contract.

Future services contracts are subject to some important statutory requirements under Part 4, Division 2 of the BPCPA.

The BPCPA sets out a long list of requirements under ss. 19 and 23 for the content of future services contracts, such as the name, address, and telephone number of the seller, a detailed description of the goods or services to identify them with certainty, the price, supply date, and a detailed statement of the terms of payment. When credit is extended, there also needs to be a description of the subject matter of any security interest. This is not an exhaustive list; please consult the Act.

Under s 23, a future performance contract is not enforceable by the seller if a rebate or discount is given on the condition of some event occurring after the time the buyer agrees to buy (usually a referral selling scheme whereby the purchaser aids the seller in making a further sale).

1. Right of Cancellation - Future Performance Contracts

If the future performance contract does not contain the required information (ss 19 and 23), then a consumer may cancel the contract by giving notice of cancellation to the supplier within one year of the date that the consumer receives a copy of the contract (s 23(5)). Section 54 sets out the required form and procedure for giving notice. (See Section V.A.1).

C. Travel or Vacation Clubs, “Book-of-the-Month”, and Record Clubs (Continuing Services Contracts)

These contracts are called continuing services contracts because, while you may pay now, the contract extends into the future. This type of contract is often used when one joins a karate club or a dance studio, buys a membership in a vacation club, or joins a “book of the month” club.

Continuing services contracts must not exceed 24 months in duration. However, a contract can allow the consumer to renew in writing within one month of its expiry, and if the consumer exercises this option, the contract can continue past 24 months (s 24(3)). If a contract does exceed 24 months in duration, there are remedies available under s 24(6).

1. Right of Cancellation

Because they are often sold at high-pressure presentations, under s 24 these contracts are subject to a 10 day right of cancellation from the date the consumer receives a copy of the contract (s 25(6)). Section 26(3), which also gives a 10 day right of cancellation, applies to time-share interests not covered by the Real Estate Development Marketing Act, SBC 2004, c 41, such as resorts or condominiums.

Contracts for continuing services can also be cancelled if there is a material change in circumstances of the buyer or the seller, and where the buyer or seller gives notice of cancellation (s 25). When alleging a material change in circumstances as the basis for cancelling, the reason must be specified in the notice (s 25(2)).

Material changes in circumstances include, but are not limited to:

• the buyer’s death; and
• permanent disability or permanent relocation further than 30 km from the seller.

Material changes in circumstances of the seller include:

• through the partial or entire fault of the seller, the services are not completed, or at any time the seller appears to be unable to reasonably complete the services in the time frame set out in the contract for the completion of services;
• the services are no longer available because of the seller’s discontinued operation or substantial change in operation; and
• the relocation of the business of the seller 30 km from the buyer without provision of equivalent service within 30 km.

Section 54 sets out the required form and procedure for giving notice. (See Section V.A.1)

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