Contracts and Consumer Rights Flashcards

A consumer completes a vehicle purchase entirely through a dealer's website — browsing inventory, selecting options, and finalizing payment online. Under the Consumer Protection Act, 2002, when does the 7-day cooling-off period for this internet agreement BEGIN?

Answer: On the later of: the date the consumer receives a written copy of the agreement, or the date the vehicle is delivered

Under the Consumer Protection Act, 2002, for internet agreements the 7-day cancellation period does not begin at signing. It begins on the later of two events: receipt of a written copy of the agreement OR delivery of the goods. This protects consumers who may receive the agreement before the vehicle arrives, ensuring the full cooling-off window runs from when they have both the contract and the vehicle in hand.

A registered OMVIC dealer's salesperson tells a prospective buyer that a used vehicle 'has never been in an accident.' The salesperson genuinely believes this is true but has no documentation to support the claim. Under the Consumer Protection Act, 2002 unfair practices provisions, how should this statement be classified?

Answer: A false, misleading, or deceptive representation, because the seller's subjective belief is not a defence under the CPA

Under the CPA, 2002, unfair practices include representations that are false, misleading, or deceptive regardless of the seller's intent or belief. Good faith is NOT a defence. A salesperson who makes a factual claim they cannot substantiate is engaging in an unfair practice even if they sincerely believe the statement. The CPA imposes an objective standard, not a subjective one.

A consumer purchases a used vehicle from a private individual who, unknown to the consumer, has bought and sold 14 vehicles in the past 12 months without being registered with OMVIC. The consumer later suffers a $9,000 financial loss due to undisclosed problems with the vehicle. Which statement BEST describes the consumer's access to the OMVIC Compensation Fund?

Answer: The consumer is ineligible because the Compensation Fund only covers losses arising from transactions with OMVIC-registered dealers

The OMVIC Compensation Fund exists to protect consumers who suffer financial losses in transactions with OMVIC-registered dealers. An unregistered seller (curbsider) — even one who is illegally acting as a dealer — is NOT a registered dealer, so no claim against the Fund is available. The consumer's recourse is civil litigation against the individual. This is one of the most important reasons OMVIC warns consumers to verify registration before purchasing.

Under Ontario Regulation 333/08 (the general regulation under the Motor Vehicle Dealers Act, 2002), a written agreement for the sale of a used vehicle MUST include which of the following disclosures that is NOT required for a new vehicle sale?

Answer: The odometer reading at the time of sale and a statement as to its accuracy

For used vehicle sales, Ontario Regulation 333/08 specifically requires the written agreement to include the odometer reading at the time of sale along with a statement regarding its accuracy (i.e., whether the reading is believed to be accurate or if there is reason to doubt it). This requirement reflects the heightened risk of odometer tampering or rollback in used vehicle transactions and is a disclosure element unique to used — not new — vehicle contracts.

A consumer signs a vehicle purchase agreement that includes a clause stating: 'All deposits are non-refundable under any circumstances.' The consumer later discovers the dealer misrepresented the vehicle's accident history — a clear unfair practice under the CPA. The consumer wishes to rescind the contract and recover their $3,500 deposit. How does the non-refundable deposit clause affect the consumer's rights?

Answer: The clause is unenforceable to the extent that it conflicts with consumer rights granted by the CPA, 2002, which cannot be waived by contract

Under section 7 of the Consumer Protection Act, 2002, any term of an agreement that purports to waive or limit rights conferred by the CPA is void. A 'non-refundable deposit under any circumstances' clause cannot strip away the consumer's statutory right to rescind a contract tainted by an unfair practice. When the consumer exercises their CPA right of rescission, the dealer must return all consideration paid, including the deposit — regardless of what the contract says.

A consumer signs a vehicle purchase agreement that is explicitly 'conditional upon the consumer obtaining financing at an interest rate not exceeding 7.9% APR within 5 business days.' On day 6, the dealer informs the consumer that financing was declined. The dealer then offers to arrange financing at 11.4% APR and insists the consumer is now bound by the contract regardless. Which statement is legally MOST accurate under Ontario law?

Answer: Because the condition precedent was not satisfied within the specified period, the contract did not become binding, and the dealer must return any deposit paid

A 'subject to financing' clause at a specified rate is a condition precedent — the contract only becomes binding if that condition is fulfilled. When financing at the stipulated rate is not obtained within the agreed timeframe, the condition fails and the contract never comes into force. The dealer cannot unilaterally substitute different terms (a higher rate) and compel the consumer to proceed. The deposit must be returned in full. Dealers who attempt to hold consumers to the contract under these circumstances may also be engaging in an unfair practice.