Canada: Fair Warning To Contractors – The Fair Trading Act's Requirements Apply To Construction Contracts

Last Updated: February 21 2017
Article by Sarah R. Levine

The recent Provincial Court of Alberta decision, R. v. 1587915 Alberta Inc. ("1587915"), is a stark reminder of the Alberta Fair Trading Act's (the "FTA") application to construction contracts, particularly for home renovations, and the potentially serious ramifications for contractors who deviate from the technical requirements of fair practice and compliance under the FTA. Not only can corporations be found guilty of contraventions of the FTA, but their directors can also be found guilty of the offence if they authorize the impugned conduct, whether or not the corporation has been prosecuted for the offence.

The Facts

1587915 involves 31 charges under the FTA and its Regulations against 1587915 Alberta Inc. and its directors, Kieron and Greta Warren. Kieron Warren ("Warren") was also charged with four counts under the Criminal Code- two counts of fraud (under section 380(1)(b)) and two counts of theft (section 334(b)).

The 31 charges under the FTA and Regulations arose in respect of 6 families that 1587915 contracted with to provide home renovations. The charges against 1587915, Kieron and Greta Warren were as follows:

Six Counts   Section 104(1) FTA: No person may engage in a designated business unless the person holds a licence under this Act that authorizes the person to engage in that business;

Six Counts   Section 10(2)(a) of the Prepaid Contracting Business Licensing Regulation AR 185/99. A person who is engaged in a prepaid contracting business must ensure that every prepaid contract the person enters into complies with the requirements of section 35 of the Act;

Six Counts   Section 31(2) FTA: Within 15 days after a direct sales contract is cancelled, the supplier must refund to the consumer all money paid by the consumer and return to the consumer's premises any trade-in or an amount equal to the trade-in allowance;

Six Counts   Section 6(4)(a) FTA: It is an unfair trade practice for a supplier to do or say anything that might reasonably deceive or mislead a customer.

Six Counts   Section 6(4)(n) FTA: It is an unfair trade practice for a supplier to represent that goods or services will be supplied within a stated period if the supplier knows or ought to know that they will not.

One Count   Section 10(3) Prepaid Contracting Business Licensing Regulation AR 185/99: A person who is engaged in the prepaid contracting business and who enters into a prepaid contract with a buyer must provide a copy of the signed contract to the buyer.

A prepaid contracting business is a business designated as such by the Designation of Trades and Businesses Regulation. These businesses include contracts for construction, maintenance or renovation where, critically, the prepaid contractor solicits, negotiates or concludes construction or maintenance contracts in person at any place other than their place of business and accepts money before all the work is done and/or the services are provided. Such operations require a license in order to engage in the prepaid contracting business. A direct sales contract is a consumer transaction where the consideration for the goods or services exceeds $25 and is negotiated or concluded in person at a place other than the supplier's place of business or at a place other than a market place, auction, trade fair, agricultural fair or exhibition.

Behaviour in Breach of the FTA and Regulations

The six contracts from which the charges arose are variations on the same theme. In each of the contracts, references were made to completion deadlines and payment due dates. In each case, the families expressed concern that insufficient progress had been made by the dates when the contractor demanded more money. When the issue arose, as it did in each case, Warren referred back to the contract showing that the due dates of payments were clearly stated and were not related to progress.

In each of the six project situations, much the same pattern of conduct followed: after execution of the contract and the first payment, demolition began and generally proceeded. After demolition, customer complaints were made by all families regarding: lack of workers, lack of workers with appropriate skills, periods of inactivity and difficulty in reaching Warren. When meetings were held with Warren, he stated that the customers were late in making progress payments and in breach of the contract. Evidence was heard that additional contractors were called in by customers, and their explanation for engaging additional contractors was nonattendance by the contractor and lack of progress on their project.

Following a consideration of the evidence given by the parties, the Court found that 1587915, Kieron and Greta Warren were guilty of engaging in a prepaid contract without a license for all six contracts; 1587915 and Warren were guilty of failing to comply with the prepaid contract requirements; and that 1587915 and Warren were guilty of failing to refund money to their customers following the cancellation of a prepaid contract.

The Court did not find 1587915, Kieron or Greta Warren guilty of doing or saying anything to mislead a customer with respect to one of the contracts, but did find either 1587915 or Warren, or both, guilty of this charge with respect to the five other contracts. Similarly, 1587915, Kieron and Greta Warren were not found guilty of promising to supply goods with the knowledge that they would not be able to with respect to the first contract. However, 1587915 or Warren, or both, were found guilty of this charge with respect to the other five contracts. Lastly, the Court did not find Warren guilty of any of the four criminal charges of theft or fraud with respect to the home renovation contracts he entered into.

Tips and Takeaways

While Warren's behaviour was particularly egregious, the moral of the story is to bear in mind the swath of technical requirements for licensing, entering into contracts, and otherwise engaging in certain business practices in accordance with the FTA and its Regulations.

The technical requirements of the FTA and its Regulations are not to be taken lightly when prepaid contractors and/or direct selling businesses contract with customers for construction services. The purpose of this legislation is ultimately to protect consumers from unfair business practices, ranging from misrepresentation and misleading customers to operating without proper licensing. As is evident from this case, the Courts will vigorously uphold this mandate in the interests of protecting the public, which can be to the detriment of contractors if they do not take care to comply with the FTA and its requirements.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Sarah R. Levine
Events from this Firm
19 Dec 2017, Webinar, Calgary, Canada

McLennan Ross previously conducted a webinar on June 6, 2017 about the passage of Bill 17, during which we reviewed the changes to the Employment Standards Code and the Labour Relations Code. During that webinar, we identified a number of issues which would depend upon the language of the Regulations, which had not yet been developed.

21 Nov 2018, Webinar, Calgary, Canada

Changes to the Employment Standards Code this year increased the number of unpaid leaves to which employees are entitled for the purpose of allowing them to deal with family related issues.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions