Distance Contracts – What You Should Know About Sales Over the Internet in Québec

Québec’s Consumer Protection Act deems sales made over the Internet with residents of the province to be subject to Québec law. Such sales are termed “distance contracts” and are subject to the formal and substantive provisions of the Act.

The distance contract provisions under the Act are very similar to provisions that have been adopted under the e-commerce legislation in other provinces, since they are based on the Internet Sales Contract Harmonization Template, but the substantive provisions of Québec law relating to warranties, together with the regulations concerning advertising, impose additional obligation on Internet vendors.

Consumer Protection Act Provisions Respecting Distance Contracts

With respect to the formation and form of a distance contract, the Act requires that consumers to be provided with a written copy of the contract in a format that may be easily saved and printed by the consumer (an electronic copy is sufficient for such purposes). The contract itself must set out certain basic information concerning the parties, the object of the contract, the price, information concerning additional costs (such as customs duties and shipping costs) that cannot be determined precisely at the time of contract formation, the method of delivery and the name of the carrier – together with the applicable conditions respecting cancellation, return, exchange and refund. Perhaps the most anomalous requirement is the need for the vendor to stipulate the time within which the vendor’s obligation must be performed.

Failure to comply with these formal requirements, or failing to provide the consumer with an opportunity to accept or reject the contract, or to verify that all the information required to be set out in the contract is correct and complete before the contract is complete, entitles the consumer to cancel or rescind the contract within 7 days of receiving the contract.

Cancellation of the contract also results in the automatic cancellation of any other contracts accessory to the main contract, such as a credit contract, and requires the vendor to refund all sums paid under the contract or any accessory contract within 15 days. If the vendor fails to perform such obligations and the consumer has paid by credit card, the consumer is entitled to claim a chargeback from the credit card issuer.

In addition to these more technical rules respecting contract formation, the Act imposes other substantive obligations on the vendor of goods – most particularly, the warranties of fitness for purpose, durability and conformity to description. The business practices rules and sanctions arising under the Act also apply to such sales such that Québec residents would have recourse against the vendor for false or misleading advertising or representations concerning goods or services, or placing greater emphasis on premiums than on the goods or services offered and restrictions on offering additional warranties. Attempts to avoid the application of Québec consumer law through the choice of the law of another jurisdiction as the governing law of the contract, or by submitting disputes to arbitration in another jurisdiction, will not be enforceable under Québec law. Of course, services must be made available in the French language, and the provisions of the Act respecting advertising concerning credit will also apply. Therefore, if, for example, it is possible to apply online for a private label credit card, applications from Québec residents should not be accepted unless a Québec compliant cardholder agreement is available and would apply.

Exceptions to the Rule

Applying Québec law to all consumer contracts entered into over the Internet would be unmanageable and unworkable. Doing so would require every merchant in the world to know and apply Québec law. Accordingly, Québec rules respecting private international law and case law of Canadian courts have developed rules, or exceptions to the rule, of Québec law. Simply put, Québec law will apply where there is a special offer made to residents of the province, or, in the absence of such offer and in accordance with case law, there is a “real and substantive connection” with Québec ( cf. Disney Enterprises Inc., et al. v. Click Enterprises Inc. and Philip G. Evans, 2006 Can LII 10213 (Ont. S.C); Patrick Desjean v. Intermix Media, Inc. 2006 FC 1395 November 17, 2006; Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077;  Beals v. Saldanha, [2003] 3 S.C.R. 416 ; Socan v. Canadian Association of Internet Providers, [2004] 2 S.C.R. 427). Factors which the courts will examine in determining whether such connection exists are, among others, the number of contracts entered into with Québec residents, whether products may be delivered here, advertising directed at the Québec market or Canada as a whole, whether or not the vendor has employees or representatives in the province, and whether the vendor has a business plan that envisions sales to the Québec market.

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