Supreme Court Rules on the Enforceability of Consumer
By: Christine Yick
On March 18, 2011, the Supreme Court of Canada released its
long-awaited decision in Seidel v. Telus Communications
Inc. ("Telus"), clarifying the state of the
law regarding arbitration clauses and whether they act as a bar to
class action proceedings in contracts of adhesion, being contracts
presented without any ability to negotiate their terms.
Standard form franchise agreements are generally viewed as
contracts of adhesion.
In Telus, the plaintiff (Seidel) entered into Telus'
standard form cell phone contract which purported to waive the
consumer's right to bring any court proceeding,
including class actions. Seidel complained that Telus falsely
represented how it calculated air time for billing purposes and
sought relief under British Columbia's Business Practices
and Consumer Protection Act ("BPCPA") which
contained specific language invaliding arbitration clauses that
restrict a consumer's right to bring an action to enforce
consumer protection standards. In a narrow 5 to 4 ruling, the
Supreme Court of Canada found that such legislation was enforceable
to invalidate an arbitration or waiver of class action clause in
contracts of adhesion.
In reaching its decision, the Court stated that where
legislation exists that provides a specific right of access to the
court, an arbitration clause will not act as a bar to a class
action. It further stated that the courts will give effect to
commercial contracts that are freely entered into, even a
contract of adhesion. Accordingly, absent a legislative
prohibition, arbitration clauses remain prima facie
In view of this decision, franchisors should consider whether it
is advisable to include an arbitration clause in their franchise
Canadian Franchise Association Appoints Peter Snell to its
Board of Directors
Congratulations to Peter Snell who was appointed the Chair of
the Canadian Franchise Association's Legal and Legislative
Affairs Committee and to the Board of Directors of the CFA.
The Canadian Franchise Association was founded in 1967 by a
small group of franchisors who recognized the need for a national
organization committed to the growth, enhancement and development
of franchising across the country. Over 40 years later the
CFA – a not-for-profit national trade association
– represents almost 500 franchise systems and the
professionals who support the industry.
As the National Voice for Canadian Franchising the CFA promotes
excellence in franchising and works with all levels of government
to ensure the development of industry-made solutions.
Recognized as a leading national trade association in the field,
the CFA educated Canadians about franchising, specific franchise
opportunities and proper due diligence through its many events,
programs and publications.
Who, What, Where and When
Kudos to Len Polsky, Peter
Snell and Debi Sutin who are all listed
in Who's Who Legal: Canada 2010 for Franchise Law.
Len Polsky, Jeff Hoffman, Peter Snell and Debi
Sutin will be attending the International Franchise
Association Legal Symposium May 14-17, 2011 in Washington,
DC. Peter Snell and Debi Sutin will serve as
Roundtable Facilitators at the Legal Symposium. Debi's
roundtable is on "Structuring Franchise Transfers and
Re-Sale" and Peter's is on "Social Networking Sites
– Protecting the Franchisor's Trade-mark and
Peter Snell and Len Polsky will be attending
the International Bar Association Legal Conference in Washington,
DC on May 18, 2011. Peter Snell will be
speaking and providing a legal update on franchising in Canada as
part of the "News From Around the World" session.
Len Polsky will be attending a meeting of the
Executive of the International Franchise Committee of the
International Bar Association while in Washington, DC.
Peter Snell, as Chair of the Canadian
Franchise Association Legal & Legislative Affairs Committee
will be presenting an update on franchise law in Canada at the
International Franchise Association's Legal & Legislative
Affairs Committee meeting in Washington, DC on May 14, 2011.
Peter Snell's article on
"Understanding the Disclosure Document" will be published
in the next edition of the Franchise Entrepreneur.
Len Polsky's article "A New Word on
Trade-Mark Use in Canada for Services" will be published in
the next edition of the Franchise & Distribution Journal.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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