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
13 Sep 2017, Webinar, Calgary, Canada

Accommodation in the workplace is not a new concept. However, the needs of employees that employers are being asked to accommodate are continuing to evolve and change. In addition, the expansion of human rights legislation to add additional types of expression and personal characteristics which will require accommodation is on the horizon.

 
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.