Recently, the Court of Québec reminded merchants of their
responsibility to ensure that consumers are cognizant of important
contractual clauses at the time a contract is entered into. In the
case of 159191 Canada inc. (Discount Location d'autos et
camions) c. Waddell1, the Court had to
decide whether a clause in a two-page vehicle rental contract which
excluded insurance coverage in a specific situation was valid under
Québec law.
FACTS
The facts of the case are as follows. The Defendant, Mr. Patrick
Waddell, rented a van from the Plaintiff, Discount Location
d'autos et camions ("Discount") and opted to pay for
additional damage insurance. That same day, while attempting to
park the van, Waddell collided with a balcony and damaged the van
significantly. The parking space was large enough for a standard
car but too small for the van. Upon returning the van to Discount,
Waddell was told that the rental contract expressly excluded
insurance coverage for damage resulting from insufficient height or
width clearances. Waddell contested the application of the
exclusionary clause and refused to pay for the damages.
Consequently, Discount instituted proceedings against him to
recover the amount of $14,906, representing the difference in the
value of the van before and after the accident.
At trial, Discount argued that, in accordance with relevant case
law, it had intentionally printed the clause on the reverse-side of
the contract, in the same section as the client's acceptance
and signature. Therefore, Waddell should have been aware of it. In
response, Waddell argued that Discount's representative failed
to bring the clause to his attention, and that, on its own, the
font, size and quality of print rendered it illegible.
FINDING
Relying on several legislative provisions, the Court found in
favour of Waddell and dismissed Discount's claim.
ANALYSIS
First, the Court explained that based on Article 1436 of the
Civil Code of Quebec2
("CCQ"), any clause in a consumer contract which
is illegible or incomprehensible to a reasonable person is
null if a consumer suffers injury therefrom. The
Court found that two of the conditions for the application of this
provision were satisfied. The Court determined that the contract in
question was a consumer contract within the meanings of Article
1379 CCQ and Section 2 of Quebec's Consumer
Protection Act3 ("CPA"). It was
also clear that Waddell would suffer injury from the application of
the clause, since he alone would be responsible for paying to
repair the vehicle. The principle issue, therefore, was whether the
clause was illegible.
Second, before addressing the issue of legibility, the Court
explained that because a merchant has more knowledge and power than
a consumer, it has the obligation to inform the latter of important
terms stipulated in consumer contracts. This obligation stems from
the duty to act in good faith imposed by Articles 6, 7, and 1375
CCQ.
Third, the Court examined whether Waddell had truly consented to
the application of the clause. In accordance with Section 9
CPA, the Court analyzed the circumstances in which the
contract was entered into and explained that the fact that Waddell
had signed the contract was not sufficient proof of his consent.
The Court explained that Discount had to prove that Mr. Waddell had
in fact read and understood its terms. In referring to the Supreme
Court of Canada decision Dell Computer, the Court explained that
"a clause that is buried among a large number of other clauses
because of its location in the contract is characterized as
illegible"4.
Fourth, the Court explained that the size, font, spacing, and
colour contrast of the text may also render it illegible. The Court
further noted that the merchant must use reasonable efforts to make
the text accessible, especially when a clause affects the rights of
a consumer. In fact, the clause at issue failed to meet the
requirements of Section 28 of the Regulation respecting the
application of the Consumer Protection Act5,
namely, that it be "set in typeface equivalent to HELVETICA
LIGHT of at least 8 points with 10-point leading". It was
typed in a 7 point font without sufficient spacing, and did not
require initialing, in contrast with other less important clauses
for the consumer (such as clauses notifying the consumer that he
had to return the vehicle with a full tank of gas, or asking the
consumer to confirm he is insured) in the contract. Other cases
cited in this decision deem to be illegible light grey letters
printed on poor quality white paper.
Lastly, the Court referred to Section 17 CPA which
stipulates that, "in case of doubt or ambiguity, the contract
must be interpreted in favour of the consumer".
Based on the foregoing, the Court held that Waddell's consent
had been vitiated and found the clause to be null. It explained
that any reasonable person presented with the contract would not
have understood the extent of its application nor been aware of the
existence of the clause. The fact that Discount printed the clause
on the back-side of the contract, near the consumer's
signature, did not render it legible. It was also of no consequence
that Waddell's own personal car insurance included a similar
clause.
CONCLUSION
This case reminds merchants of their burden to inform consumers,
at the time a contract is entered into, of any material clauses
which they may seek to enforce later on. In addition, merchants
have the obligation to draft contracts that respect the
requirements of the CPA and related regulations, most
notably, with respect to font, size and spacing. Lastly, merchants
can only benefit from the Court's requirement that consumers be
asked to initial clauses that render their obligations more
onerous. By doing so, merchants can better protect their interests
and ensure that their contracts will be enforceable against
consumers in the context of a legal dispute.
1 2013 QCCQ 3560.
2 c. C-1991.
3 c. P-40.1.
4 Dell Computer Corp. v. Union des consommateurs, [2007] 2 S.C.R. 801, 2007 SCC 34, para.90. 5 c.
5 c. P-40.1, r. 3.
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