What Types of Deals Must Be Done In Writing?

Although Common For Business Dealings to Occur Without a Written Contract, For Business-to-Consumer Dealings Involving a Future Performance Agreement the Law Mandates the Use of a Written Contract.

Understanding the Requirement of Written Contracts For Future Performance Agreements Involving Consumers

A deal done on a handshake rather than done using a written contract document may be a gracious way of expressing confidence and trust between parties; however, such can become problematic even amongst the most honest and well intentioned persons.  To reduce the potential for disagreements and conflicts, among other reasons, in business-to-consumer dealings, where goods or services are deliverable at a later date, the law mandates the use of a written contract.

The Law

Mandate of Contracts Involving Future Performance Contracts Per the Consumer Protection Act, 2002 As is prescribed by section 22 of the Consumer Protection Act, 2002, in combination with section 24 of O. Reg. 17/05 as a regulation applicable to the Consumer Protection Act, 2002, a business that is to deliver goods or perform services at a later date, thereby the deal qualifying as a Future Performance Agreement, must provide a written contract containing specific terms and details.  The law specifically states:


Requirements for future performance agreements

22 Every future performance agreement shall be in writing, shall be delivered to the consumer and shall be made in accordance with the prescribed requirements.


Requirements for future performance agreements

24. For the purpose of section 22 of the Act, a future performance agreement that is not a gift card agreement to which sections 25.2 to 25.5 apply shall set out the following information:

1.  The name of the consumer.

2.  The name of the supplier and, if different, the name under which the supplier carries on business.

3.  The telephone number of the supplier, the address of the premises from which the supplier conducts business, and information respecting other ways, if any, in which the supplier can be contacted by the consumer, such as the fax number and e-mail address of the supplier.

4.  A fair and accurate description of the goods and services to be supplied to the consumer, including the technical requirements, if any, related to the use of the goods or services.

5.  An itemized list of the prices at which the goods and services are to be supplied to the consumer, including taxes and shipping charges.

6.  A description of each additional charge that applies or may apply, such as customs duties or brokerage fees, and the amount of the charge if the supplier can reasonably determine it.

7.  The total amount that the supplier knows is payable by the consumer under the agreement, including amounts that are required to be disclosed under paragraph 6, or, if the goods and services are to be supplied during an indefinite period, the amount and frequency of periodic payments.

8.  The terms and methods of payment.

9.  As applicable, the date or dates on which delivery, commencement of performance, ongoing performance and completion of performance are to occur.

10.  For goods and services that are to be delivered,

i.  the place to which they are to be delivered, and

ii.  if the supplier holds out a specific manner of delivery and will charge the consumer for delivery, the manner in which the goods and services are to be delivered, including the name of the carrier, if any, and including the method of transportation to be used.

11.  For services that are to be performed, the place where they are to be performed, the person for whom they are to be performed, the supplier’s method of performing them and, if the supplier holds out that a specific person other than the supplier will perform any of the services on the supplier’s behalf, the name of that person.

12.  The rights, if any, that the supplier agrees the consumer will have in addition to the rights under the Act and the obligations, if any, by which the supplier agrees to be bound in addition to the obligations under the Act, in relation to cancellations, returns, exchanges and refunds.

13.  If the agreement includes a trade-in arrangement, a description of the trade-in arrangement and the amount of the trade-in allowance.

14.  The currency in which amounts are expressed, if it is not Canadian currency.

15.  Any other restrictions, limitations and conditions that are imposed by the supplier.

16.  The date on which the agreement is entered into.

Despite the requirement of a written contract for future performance agreements, verbal agreements entered into with little more than a handshake remain common.

Summary Comment

To serve as protection for both consumer as well as suppliers, the Consumer Protection Act, 2002, prescribes the use of a written contract for dealings that qualify as a future performance agreement.  Essentially, a future performance agreement includes all dealings where the purchased goods or services are deliverable at some date and time after the date that the deal is made.

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