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C.C.S.M. c. C200
The Consumer Protection Act
| Table of Contents | Regulations |
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:
PART I
INTERPRETATION AND APPLICATION
1(1) In this Act
"advance", in relation to a credit agreement, means value received by a borrower as determined under section 6; (« avance »)
"APR", in relation to
(a) a credit agreement, means the cost of credit under the credit agreement, expressed for disclosure purposes as an annual percentage rate determined in accordance with the regulations, and
(b) a lease, means the APR determined in accordance with the regulations; (« TAP »)
"assignment" includes a transfer of a mortgage; (« cession »)
"borrower" means
(a) a person to whom credit is or will be extended under a credit agreement, and
(b) a hirer of goods on a retail hire-purchase,
including a prospective borrower, and in relation to a mortgage, it also includes a person from time to time deriving title under the original borrower; (« emprunteur »)
"broker" means a person who, for compensation, assists a person in obtaining credit or a lease; (« courtier »)
"brokerage fee" means an amount paid or payable by or on behalf of a borrower — or a lessee, in the case of a lease — to a broker for arranging or attempting to arrange a credit agreement or lease; (« frais de courtage »)
"bureau" means the Consumers' Bureau; (« Office »)
"buyer", except in Part XV (Prepaid Services), includes a hirer on a retail hire-purchase; (« acheteur »)
"cash customer" means a person who buys a product and pays for it in full on or before receiving it; (« consommateur payant comptant »)
"cash price" of a product means
(a) in relation to a sale,
(i) the price agreed on by the parties, or
(ii) if the seller sells the product to cash customers in the ordinary course of business at a lower price, that lower price, and
(b) in relation to an advertisement, the price at which the advertiser offers to sell the product to cash customers or, if the advertiser does not offer the product to cash customers, the price stated in the advertisement,
and, for the purpose of determining the amount advanced under a credit agreement, includes taxes and other charges payable by a cash customer; (« prix au comptant »)
"collateral" means property in which a credit grantor has a security interest for the purpose of securing the payment or performance of a borrower's obligations under a credit agreement; (« biens grevés »)
"collection agent" means any person who
(a) collects or attempts to collect money owing to others, or
(b) is used by others to levy distress or seize goods, or
(c) collects money under any name which differs from that of the creditor to whom the money is owed, or
(d) offers or undertakes to act for a debtor in arrangements or negotiations with creditors or receives money from a debtor for distribution to creditors, or
(e) solicits accounts for collection or offers or undertakes to collect debts for others either immediately or at a future date, or
(f) writes letters, or makes telephone or personal calls on behalf of others for the purpose of inducing a debtor to pay a debt,
but does not include
(g) a person who accepts payment of accounts on behalf of creditors but who does not otherwise negotiate with or in anyway attempt to obtain payment from debtors in respect of the amount owing, or
(h) a bank, or
(i) a credit union, or
(j) a trustee licensed under the Bankruptcy and Insolvency Act (Canada) acting in that capacity, or
(k) a duly appointed officer of a court, or
(l) a barrister or solicitor entitled to practice in Manitoba and acting in that capacity, or
(m) a trust company, or
(n) a person registered under The Real Estate Brokers Act as a real estate broker acting in that capacity, or a person registered under The Real Estate Brokers Act as a salesperson acting in that capacity, or
(o) a person licensed under The Insurance Act as an insurance agent acting in that capacity, or
(p) a person registered under The Mortgage Dealers Act as a mortgage dealer acting in that capacity, or
(q) a person appointed under The Corporations Act as a liquidator acting in that capacity; (« agent de recouvrement »)
"common-law partner" of a person means a person who, not being married to the other person, is cohabiting with him or her in a conjugal relationship of some permanence; (« conjoint de fait »)
"consumer services officer" means a person designated under section 72.1 as a consumer services officer; (« agent des services aux consommateurs »)
"cost of credit", in relation to a credit agreement, means the difference between the value given or to be given by the borrower in connection with the agreement, and the value received or to be received by the borrower in connection with it, assuming there is no prepayment or default; (« coût du crédit »)
"court" means the Court of Queen's Bench; (« tribunal »)
"credit agreement" means an agreement or transaction under which credit is, or is to be, extended, including
(a) an agreement for a loan of money,
(b) a mortgage,
(c) an agreement for a credit sale,
(d) an agreement under which loans of money or credit sales may occur in the future, and
(e) an agreement for a line of credit,
and including an agreement to renew a credit agreement; (« contrat de crédit »)
"credit card" means a card or device used to obtain advances under a credit agreement for open credit; (« carte de crédit »)
"credit grantor" means
(a) a person who extends, or will extend, credit under a credit agreement, and includes a prospective credit grantor, and
(b) an assignee of a credit grantor's rights under a credit agreement, if — except in the case of an assignment of a mortgage — the borrower has been given notice of the assignment,
and in relation to a mortgage, it also includes a person from time to time deriving title under the original credit grantor; (« prêteur » ou « fournisseur de crédit »)
"credit sale" means a sale of a product in relation to which all or a part of the purchase price is financed with credit extended by
(a) the seller or manufacturer of the product, or
(b) any other person, if the seller or manufacturer arranges the financing or acts as agent for the other person; (« vente à crédit »)
"debtor" includes a borrower and a guarantor of a borrower's indebtedness; (« débiteur »)
"default charge" means a charge imposed on a borrower — or on a lessee, in the case of a lease — for a default under a credit agreement or lease, or for a failure to comply with any other obligation under a credit agreement or lease, but does not include interest on an overdue payment; (« frais de défaut de paiement »)
"director" means the person employed by the government under the minister and designated as the director of the bureau, and includes a deputy of the director; (« directeur »)
"direct seller" means the person who, on behalf of a vendor, makes any offer, solicitation, proposal or approach which is intended to result in a sale to which Part VII applies; (« démarcheur »)
"fixed credit" means credit under a credit agreement that is not open credit; (« crédit à taux fixe »)
"floating rate" means a variable interest rate that is calculated with reference to an index rate, and for this purpose, an interest rate does not cease to be a floating rate merely because it is limited by a minimum or maximum rate or is fixed for a period of time with reference to an index rate at any particular time; (« taux variable »)
"goods" means tangible personal property other than money; (« biens » ou « objets »)
"grace period" means a period during which interest accrues under a credit agreement or lease but becomes payable only if the borrower or lessee fails to meet certain conditions specified in the agreement; (« délai de grâce »)
"high ratio mortgage" means a mortgage on real property under which the amount advanced, together with the amount outstanding under any other mortgage that ranks equally with or prior to the mortgage, exceeds 75% of the market value of the real property; (« hypothèque à coefficient élevé »)
"index rate" means a rate that meets criteria prescribed by the regulations; (« taux indiciel »)
"initial disclosure statement" means
(a) in relation to fixed credit, the statement referred to in section 34.3,
(b) in relation to open credit, the statement referred to in section 35.2, and
(c) in relation to a lease, the statement referred to in subsection 39(1); (« document d'information initial »)
"interest-free period" means a period after an advance is made during which interest does not accrue on the advance; (« période sans intérêt »)
"lease" means an agreement for the hire of goods, except in relation to a residential tenancy agreement; (« bail »)
"legal rate" of interest means the rate from time to time payable under the Interest Act (Canada) on liabilities on which interest is payable but on which no other rate is fixed; (« taux légal »)
"lessee" includes a prospective lessee; (« preneur à bail »)
"lessor" includes a prospective lessor; (« donneur à bail »)
"minister" means the member of the Executive Council charged by the Lieutenant Governor in Council with the administration of this Act; (« ministre »)
"mortgage", "mortgagee", "mortgage money" and "mortgagor" have the meanings assigned to them by The Mortgage Act; (« hypothèque », « créancier hypothécaire », « somme garantie par une hypothèque », « débiteur hypothécaire »)
"non-interest finance charge" means a charge that a borrower — or a lessee, in the case of a lease — is required to pay in connection with a credit agreement or lease, including a premium for title insurance if the borrower is not a beneficiary of the insurance, and a fee for discharging a credit agreement, but not including the following:
(a) interest,
(b) a default charge,
(c) a charge for an optional service,
(d) a charge for an amount under section 6 that constitutes value received by the borrower or lessee,
(e) in the case of a credit sale, a charge that would also be payable by a cash customer,
(f) a charge for a share in a cooperative or a credit union; (« frais financiers autres que l'intérêt »)
"open credit" means credit under a credit agreement that
(a) anticipates multiple advances, which are to be made at the borrower's request, and
(b) whether or not it sets a credit limit, does not establish the total amount to be advanced; (« contrat d'avance à découvert »)
"optional service" means a service that is offered to a borrower in connection with a credit agreement — or to a lessee, in the case of a lease — but that the borrower or lessee does not have to accept in order to enter into the credit agreement or lease; (« services facultatifs »)
"outstanding balance" in relation to a credit agreement or lease means, at any particular time, the total amount then owing under the agreement or under a promissory note given by the borrower or lessee in connection with the agreement; (« solde impayé »)
"person" includes a partnership and an unincorporated association; (« personne »)
"person entitled to disclosure" means, in relation to a credit agreement,
(a) a borrower, and
(b) an individual whose consent is required under The Homesteads Act; (« personne devant recevoir des renseignements »)
"prescribed" means prescribed by the regulations made under this Act; (« prescrit »)
"product" means goods or services or both, but does not include the extension of credit; (« produits »)
"retail hire-purchase" of goods means any hiring of goods from a person in the course of his business in which
(a) the hirer is given an option to purchase the goods; or
(b) it is agreed that upon compliance with the terms of the contract the hirer will either become the owner of the goods or will be entitled to keep them indefinitely without any further payment;
except
(c) a hiring in which the hirer is given an option to purchase the goods exercisable at any time during the hiring and which may be determined by the hirer at any time prior to the exercise of the option on not more than two months' notice without any penalty;
(d) a hire-purchase of goods by a hirer who himself intends either to sell them or to re-let them for hire by others unless the goods are intended for resale or re-let in a manner to which Part VII of this Act applies;
(e) a hire-purchase by a hirer who is a retailer of a vending machine or a bottle cooler to be installed in his retail establishment;
(f) a hire-purchase of farm machinery and equipment to which The Farm Machinery and Equipment Act applies;
(g) a hire-purchase in which the hirer is a corporation; and
(h) a hire-purchase of goods by a hirer who himself intends to use them or uses them for the primary purpose of carrying on a business, unless the goods are intended for resale or re-let in a manner to which Part VII applies; (« location-vente au détail »)
"retail sale" of goods or of services or of both means any contract of sale of goods or services or both made by a seller in the course of his business except
(a) any contract of sale of goods or services which are intended for resale by the buyer in the course of his business unless the buyer intends to resell or re-let the goods or services, or both, in a manner to which Part VII applies;
(b) any contract of sale to a retailer of a vending machine or a bottle cooler to be installed in his retail establishment;
(c) any contract of sale of farm machinery and equipment to which The Farm Machinery and Equipment Act applies;
(d) any contract of sale to a corporation; and
(e) any contract of sale of goods or services intended to be used or used by the purchaser for the primary purpose of carrying on a business, unless the goods or services are intended for resale or re-let in a manner to which Part VII applies; (« vente au détail »)
"sale" includes any transaction whereby the whole or part of the price is paid or satisfied by the exchange of other property, real or personal; (« vente »)
"security interest" means an interest in property that secures the payment or performance of a borrower's obligations under a credit agreement, or a lessee's obligations under a lease; (« sûreté »)
"seller", except in Part XV (Prepaid Services), includes a person who lets goods on hire by a retail hire-purchase; (« vendeur »)
"services", except in Part XV (Prepaid Services), means services or facilities that are or may be provided to a consumer; (« services »)
"term", in relation to the duration of a credit agreement, means the period over which credit is to be extended under the agreement — assuming there is no prepayment or default — and may be equal to or less than the amortization period; (« durée »)
"title insurance" means an agreement to indemnify against damage or loss arising from a defect in title to real property; (« assurance titres de propriété »)
"vendor" means a person who makes, or uses others to make, an offer, solicitation, proposal or approach that is intended to result in a sale or retail hire-purchase to which Part VII (Direct Sellers) applies. (« marchand »)
1(2) Repealed, S.M. 1989-90, c. 53, s. 5.
Registered common-law relationship
1(3) For the purposes of this Act, while they are cohabiting, persons who have registered their common-law relationship under section 13.1 of The Vital Statistics Act are deemed to be cohabiting in a conjugal relationship of some permanence.
Reference to "Act" includes regulations
1(4) A reference to "this Act" includes the regulations made under this Act.
S.M. 1989-90, c. 53, s. 2 to 5; S.M. 2002, c. 24, s. 13; S.M. 2002, c. 47, s. 30; S.M. 2002, c. 48, s. 28; S.M. 2005, c. 16, s. 3; S.M. 2006, c. 31, s. 2.
2 Repealed.
S.M. 1989-90, c. 53, s. 6; S.M. 2005, c. 16, s. 4.
3 Nothing in this Act applies to a credit agreement or lease made by, or any security given to, the Government of Canada or of a province or territory of Canada, or a Crown corporation or agency of one of those governments.
S.M. 2005, c. 16, s. 5; S.M. 2005, c. 28, s. 82.
PART II
CREDIT AGREEMENTS AND LEASES: COST OF CREDIT
DIVISION 1
GENERAL PROVISIONS
APPLICATION OF PART II
Credit agreements for non-business purposes
4(1) Subject to subsection (3), this Part, except Division 4 (Leases), applies to a credit agreement that is
(a) entered into in the course of a credit grantor's business; or
(b) arranged by a broker;
with an individual primarily for a personal, family or household purpose.
Leases for non-business purposes
4(2) Subject to subsection (3),
(a) this Division (General Provisions), except sections 5, 12, 18 to 20, 25, 26, 30 and 33 to 33.8;
(b) Division 4 (Leases);
(c) Division 6 (Compensation and Penalties), except section 55; and
(d) Division 7 (Transitional Application of Part II);
apply to a lease entered into in the course of a lessor's business — or arranged by a broker — with an individual primarily for a personal, family or household purpose. References in the applicable provisions of this Division and Division 6 to "credit agreement", "credit grantor" and "borrower" are to be read as including "lease", "lessor" and "lessee" respectively.
Exceptions to subsections (1) and (2)
4(3) This Part does not apply to a credit agreement or lease
(a) in which any of the borrower's obligations under the agreement, or the lessor's obligations under the lease, are guaranteed by the Government of Canada or of a province or territory of Canada, or a Crown corporation or agency — other than a Crown corporation or agency prescribed by regulation — of one of those governments;
(b) in relation to a reverse mortgage;
(c) in which there is no cost of credit;
(d) in relation to a sale of services by a public utility, as defined in The Public Utilities Board Act, unless the services are sold in connection with a sale of goods to which this Act applies;
(e) for a loan made by an insurer to a policyholder pursuant to a provision of an insurance policy; or
(f) that is exempted by regulation.
Credit agreements and hire-purchases for business purposes
4(4) This Part applies to
(a) a credit agreement in relation to a sale of goods or services to a person who buys them for business purposes; and
(b) a retail hire-purchase of goods to a person who enters into the agreement for business purposes;
if that person's primary purpose is to resell the goods or services in a transaction to which Part VII (Direct Sellers) applies.
Reliance on signed statement of purpose
4(5) A signed statement by a party to an agreement or a lease as to the primary purpose of his or her entering into the agreement or lease may be relied upon by the other party if the other party believes in good faith that the statement is true.
S.M. 1989-90, c. 53, s. 7; S.M. 2005, c. 16, s. 6.
Certain credit agreements exempt from this Part
5 Despite subsection 4(1), this Part does not apply to a credit agreement for a credit sale if
(a) the purchase price is payable in full within a fixed period after a written invoice or statement of account is given to the buyer, and no interest is payable for that period;
(b) the payment of the purchase price is unsecured, apart from any lien that may arise by operation of law;
(c) the credit agreement is not assigned in the ordinary course of the credit grantor's business, otherwise than as security for the credit grantor's obligations; and
(d) the buyer is not required to pay any non-interest finance charges.
S.M. 1989-90, c. 53, s. 8; S.M. 2005, c. 16, s. 6.
COST OF CREDIT
6(1) In determining the cost of credit under a credit agreement, the following constitute value received or to be received by the borrower:
(a) money given to or for the benefit of the borrower under the agreement;
(b) the cash price of the goods or services purchased by the borrower from the credit grantor, less any portion that is paid before credit is extended under the agreement;
(c) the amount of a monetary obligation of the borrower that is paid, discharged or consolidated by the credit grantor;
(d) if a credit card or a line of credit is used to obtain money, property or services, the amount charged by the borrower to the credit card account or to the line of credit;
(e) any of the following amounts that the credit grantor incurs in connection with the agreement and charges to the borrower:
(i) a fee paid to a public registry to register information in or obtain information from that registry,
(ii) if property is to be used as security for the performance of the borrower's obligations, a fee for a written report confirming the value, condition or location of the property, or whether it complies with applicable laws, but only if the borrower is given a copy of the report and is free to give it to others,
(iii) a premium for casualty or title insurance on the secured property, if the borrower is a beneficiary of the insurance and the property is insured for its full insurable value,
(iv) a premium for insurance that protects the credit grantor against the risk of default on a high ratio mortgage;
(f) a fee charged by the credit grantor for maintaining a tax account on a high ratio mortgage;
(g) anything designated in the regulations as value received by a borrower in connection with a credit agreement.
6(2) Despite subsection (1), the following constitute value received or to be received by the borrower in connection with a credit agreement only if they relate to an optional service, a fee or amount referred to in clause (1)(e) or (f), or something designated by regulation under clause (1)(g):
(a) insurance provided or paid for by the credit grantor in connection with the agreement;
(b) money paid, an expense incurred or anything done by the credit grantor for the purpose of arranging, documenting, securing, administering or renewing the agreement.
6(3) The following constitute value given or to be given by the borrower in connection with a credit agreement:
(a) money paid or to be paid or property transferred or to be transferred by the borrower to
(i) the credit grantor in connection with the agreement, assuming there is no prepayment or default,
(ii) a person other than the credit grantor in respect of a charge for services that the credit grantor required the borrower to obtain or pay for in connection with the credit agreement, unless the charge is for an amount to which clause (1)(e) or regulations under clause (1)(g) would have applied if it had been incurred initially by the credit grantor and then charged to the borrower, or
(iii) a broker in accordance with section 20.1;
(b) anything designated in the regulations as value given by a borrower in connection with a credit agreement.
Payments re tax account not to be considered
6(4) Despite subsections (1) and (3), amounts paid into or out of a tax account for a mortgage are not to be considered when calculating the cost of credit and APR.
GENERAL DISCLOSURE REQUIREMENTS
Requirement to disclose information
7 Every credit grantor who enters into or offers or solicits an offer to enter into a credit agreement must disclose information as required by this Act.
8 A disclosure statement
(a) must be in writing or, with the borrower's consent, in an electronic form that will allow the borrower to retain it for later reference;
(b) must express the required information clearly and in a way that is likely to bring the information to the borrower's attention; and
(c) may be a separate document or part of a credit agreement or application for a credit agreement.
Information based on estimate or assumption
9 Information in a disclosure statement may be based on an estimate or assumption if
(a) the information is not ascertainable by the credit grantor at the time of the disclosure; and
(b) the estimate or assumption is reasonable and is identified in the disclosure statement as an estimate or assumption.
Time of delivery: delivery by mail
10 A document sent by ordinary mail to a borrower at the mailing address provided by the borrower to the credit grantor is to be considered, in the absence of evidence to the contrary, to have been delivered to the borrower
(a) five days after it was sent if mailed to an address in Canada; or
(b) 10 days after it was sent if mailed to an address outside Canada.
11(1) This section applies in relation to a credit agreement other than a mortgage that is to be registered under The Real Property Act.
Time for delivery: initial disclosure statement
11(2) The credit grantor must give the initial disclosure statement for a credit agreement to the borrower before the borrower enters into the agreement or makes any payment in connection with it, whichever occurs first.
Sufficient disclosure — more than one borrower
11(3) If there is more than one borrower under a credit agreement, a disclosure statement or other document that must be given to the borrower may be given to any of them, and is not required to be given to each of them.
Initial disclosure statement for a mortgage
12(1) A credit grantor for a mortgage that is to be registered under The Real Property Act must give an initial disclosure statement, in accordance with section 34.3, to each person entitled to disclosure, at least two days before the earlier of the following:
(a) the day that the borrower first incurs an obligation to the credit grantor in relation to the mortgage, other than an obligation in respect of a charge described in subsection (4);
(b) the day that the borrower first makes a payment to the credit grantor in relation to the mortgage, other than a payment in respect of a charge described in subsection (4).
12(2) In determining when the initial disclosure statement must be given under subsection (1), Saturdays and holidays are excluded.
Person entitled to disclosure may waive time period
12(3) Despite subsection (1), a person entitled to disclosure may waive the two-day period in a manner specified in the regulations. In that case, the credit grantor must give the initial disclosure statement to the person before the first occurrence of an event described in clause (1)(a) or (b).
Charges that do not trigger time period
12(4) The following charges, if incurred for the purpose of arranging, documenting, insuring or securing a mortgage, are the charges referred to in clauses (1)(a) and (b):
(a) a fee paid to a third party to record or register a document or information in a public registry of interests in real or personal property, or to obtain a document or information from such a registry;
(b) a fee paid to a person for professional services required for the purpose of confirming the value, condition, location or conformity to law of the property that serves as security for the mortgage, if the borrower is given a report signed by the person and is free to give the report to third persons;
(c) a premium for insurance that protects the credit grantor against the risk of default on a high ratio mortgage;
(d) a premium for casualty insurance on the property that serves as security for the mortgage, if the borrower is a beneficiary of the insurance and the insured amount is the full insurable value of the property;
(e) a charge prescribed by regulation.
Disclosure in advertising to be prominent
13(1) Information required by this Part to be disclosed in an advertisement must be disclosed prominently.
13(2) Sections 34.2, 35.1 and 38 require the APR to be disclosed in an advertisement that contains certain other information. When the APR is required to be disclosed under one of those sections, it must be disclosed as prominently, in relation to looking at it, listening to it, or both, as that other information is disclosed.
APR for representative transaction
13(3) If an advertisement that is required to disclose the APR is not for a specified transaction, the advertisement must disclose the APR for a representative transaction.
S.M. 1989-90, c. 53, s. 9 and 10; S.M. 2005, c. 16, s. 6.
Advertising interest-free periods
14(1) An advertisement that states or implies that credit is interest-free for a period must disclose whether interest will be payable for the period if certain conditions are not met.
14(2) If interest will be payable for the period if certain conditions are not met, the advertisement must also disclose
(a) those conditions; and
(b) the APR for the period, or, in the case of open credit, the annual interest rate for the period, determined as if those conditions will not be met.
14(3) If the advertisement does not disclose the information required by this section to be disclosed, or does not disclose it as required by section 13 or as may be required by the regulations, the advertised credit is unconditionally free of interest during the relevant period.
No interest on deferred payment
15 If a credit grantor, when inviting a borrower to defer the payment of an amount due under a credit agreement, does not clearly disclose to the borrower that interest will accrue on the amount during the period of the deferral, no interest is payable on that amount for that period.
16 A borrower is entitled, upon request and at no cost, to be given a detailed account of his or her indebtedness from a seller or credit grantor, at least once per year, and at any other time a dispute arises between the parties.
Inconsistency between disclosure statement and contract
17(1) Subject to subsection (2), if information in a disclosure statement is more favourable to the borrower than the information or a term set out in the credit agreement, the information in the disclosure statement becomes a term of the agreement and prevails, to the extent of the inconsistency, over any other term of the agreement.
If remedy under section 56 also available
17(2) If a remedy under section 56 is also available to the borrower, subsection (1) applies only if
(a) an order under subsection 56(3) or (4) is not made; and
(b) the remedy under subsection (1) is more favourable to the borrower than the remedy under section 56.
PREPAYMENT
Application of sections 18 to 20
18(1) This section and sections 19 and 20
(a) do not apply in relation to a mortgage registered under The Real Property Act; and
(b) prevail over The Mortgage Act, in the case of a conflict with that Act.
Prepayment of outstanding balance
18(2) A borrower is entitled to prepay the outstanding balance under a credit agreement at any time, without charge or penalty.
Refund of non-interest finance charge: fixed credit
18(3) When a borrower prepays the outstanding balance under a credit agreement for fixed credit, the credit grantor must refund or credit to the borrower a portion — to be determined in accordance with the regulations — of each non-interest finance charge that was paid by the borrower or included in the outstanding balance to be prepaid.
Borrower not liable for unearned interest
18(4) When a borrower prepays the outstanding balance under a credit agreement for fixed credit, he or she is not liable for payment of any unearned interest. For the purpose of this subsection, "unearned interest" includes interest that is not yet payable due to the length of time that the principal has been outstanding.
18(5) When a borrower prepays the outstanding balance under a credit agreement for fixed credit, the credit grantor must surrender or discharge any security that it holds for the debt. This is to be done without further charge to the borrower, except that any fee to register a document necessary to effect the surrender or discharge may be charged to the borrower.
19 A borrower is entitled to prepay, without charge or penalty, on any scheduled payment date or at least monthly, a portion of the outstanding balance under a credit agreement.
Statement of outstanding balance
20 Upon the request of a borrower who wishes to make a prepayment — and at no cost unless a request has been made earlier in the year — the credit grantor must give the borrower a written statement showing
(a) the outstanding balance, including how it was calculated;
(b) the amount, if any, to be credited under subsection 18(3) if the borrower prepays the outstanding balance; and
(c) the net amount required to prepay the outstanding balance, if different from the amount in clause (a).
BROKERS
20.1(1) No broker shall charge a brokerage fee, or require or accept any payment or security from or on behalf of a borrower, for arranging or attempting to arrange a credit agreement for a borrower before the borrower receives or has access to
(a) the proceeds of the credit; or
(b) in the case of a lease, the leased goods.
20.1(2) A broker who contravenes subsection (1) must return to the borrower, on demand, the amount paid or security given by or on behalf of the borrower to the broker.
20.2(1) Before assisting a borrower to obtain credit, a broker must give the borrower a written statement, separate from any credit application or credit disclosure statement, that sets out
(a) the broker's name, business address and the telephone number;
(b) the borrower's name;
(c) the amount of the credit — or in the case of a lease, the nature of the leased goods — requested, and the date by which the credit or the leased goods are expected to be available; and
(d) the amount that will be payable to the broker for arranging the credit or lease.
20.2(2) When a brokerage fee is charged in respect of a credit agreement, the credit grantor must
(a) disclose the fee in the initial disclosure statement for the credit agreement; and
(b) account for the fee in determining
(i) the APR and the cost of credit, or
(ii) in the case of a lease, the APR.
20.2(3) Neither the credit grantor nor the broker is entitled to receive a brokerage fee from the borrower, and the borrower is entitled to a refund of any brokerage fee paid by or on behalf of the borrower, if
(a) the broker fails to comply with subsection (1); or
(b) the initial disclosure statement does not disclose the brokerage fee as required by subsection (2), or does not include it in determining
(i) the APR and the cost of credit, or
(ii) in the case of a lease, the APR.
20.2(4) A broker or credit grantor who receives a brokerage fee from or on behalf of a borrower but fails to comply with subsection (1) or (2) must refund the brokerage fee to the borrower, on demand.
20.3(1) This section applies when a broker arranges a credit agreement for credit — or, in the case of a lease, for leased goods — to be extended by a credit grantor outside the course of the credit grantor's business.
Broker to provide initial disclosure statement
20.3(2) The broker, rather than the credit grantor, is responsible for providing to the borrower the initial disclosure statement for a credit agreement to which this section applies.
Failure to provide initial disclosure statement
20.3(3) If the broker fails to provide the initial disclosure statement as required, the broker is not entitled to a brokerage fee and the borrower is entitled, on demand, to a refund of any brokerage fee paid to the broker.
Partner, director jointly liable
20.4 Every partner and director of a broker who fails to refund a brokerage fee or return an amount or security as required by section 20.1, 20.2 or 20.3 is jointly and severally liable with the broker for any loss suffered by the borrower as a result of that failure.
20.5(1) This section applies when a broker arranges a credit agreement for credit — or, in the case of a lease, for leased goods — to be extended by a credit grantor in the course of the credit grantor's business.
Brokerage fee deducted from advance
20.5(2) If the credit grantor deducts a brokerage fee from an advance, the credit grantor's initial disclosure statement must
(a) disclose the amount of the brokerage fee; and
(b) account for the fee in determining
(i) the APR and the cost of credit, or
(ii) in the case of a lease, the APR.
Credit grantor to ensure accuracy of disclosure
20.5(3) If the credit grantor authorizes the broker to provide a disclosure statement on its behalf, the credit grantor is responsible for ensuring the accuracy of the disclosure statement.
INSURANCE
21(1) A borrower who is required to purchase insurance in connection with a credit agreement may purchase it from an insurer of his or her choice. But the credit grantor may reserve the right to disapprove, on reasonable grounds, an insurer selected by the borrower.
Disclosure of borrower's right to choose insurer
21(2) A credit grantor who offers to provide or arrange insurance for a borrower must notify the borrower, in writing, that the borrower may obtain the insurance through an agent or from an insurer of the borrower's choice.
22(1) A credit grantor must promptly forward to the insurer an application for insurance that is charged to the borrower. The credit grantor must give proof of the insurance to the borrower as soon as it is effected.
Liability for insurance premium
22(2) The borrower must pay to the credit grantor the premium payable from the time the insurance policy takes effect to the date the policy, or any extension of it, expires or is cancelled. If the policy is cancelled, the credit grantor must refund to the borrower the amount of the unearned premium.
OPTIONAL SERVICES
Borrower may cancel optional service
23(1) A borrower may cancel an optional service of an ongoing nature provided by the credit grantor or an associate of the credit grantor.
Notice period for cancellation
23(2) To cancel an optional service, the borrower must give the person providing the service at least 30 days' written notice of the cancellation, or any shorter period of notice allowed by the agreement under which the service is provided.
24(1) A borrower who cancels an optional service under this section
(a) is not liable for charges relating to any portion of the service that has not been provided at the time of cancellation; and
(b) is entitled to a refund of any amount already paid for those charges.
24(2) The Lieutenant Governor in Council may, by regulation, establish the manner in which the amount of a refund under this section is to be determined.
SECURITY FOR CREDIT SALES
Failure to describe collateral for credit sale
25(1) If the initial disclosure statement for a credit sale fails to include a description of any item of collateral sufficient to identify it as collateral in relation to the sale, the credit grantor has no security interest in that item. But this does not affect the borrower's obligation to pay for the item in accordance with the agreement.
Application to court to correct description of collateral
25(2) The credit grantor may apply to the court for an order authorizing the correction of an error or omission in the description of collateral in the initial disclosure statement for a credit sale.
Court may authorize correction
25(3) The court may authorize the correction to be made if it is satisfied that the error or omission was inadvertent and the borrower was not misled by it.
25(4) If the initial disclosure statement is corrected with the permission of the borrower or under the authority of a court order, the statement must be treated as if it had been corrected before it was delivered to the borrower.
Collateral limited to goods sold
26 No part of the credit extended to a borrower on a credit sale may be secured by a security interest in goods unless
(a) the goods were included in the sale; or
(b) if the sale was made under an agreement for open credit, the goods were sold in a previous credit sale under that agreement and have not been fully paid for.
ASSIGNEES AND GUARANTORS
27(1) The rights conferred on a borrower by this Act pass to, and may be exercised by, a person claiming through or under the borrower, even if they were not expressly assigned to the person. But the person has no right to receive from the credit grantor any notice or statement required by this Act to be given to the borrower, unless the credit grantor has first been made aware of the person's right to claim through or under the borrower.
27(2) Despite subsection (1), a buyer, when selling or transferring to another person any goods that the buyer acquired on a credit sale or a retail hire-purchase, may reserve, either expressly or by necessary implication, any rights he or she has against the seller under section 58 (statutory warranty).
Assignee's obligations fixed by court
27(3) When collateral is seized by a credit grantor and an assignee of the borrower applies to the court for relief, the court, as a condition of granting relief, may require the assignee to assume personal liability for the balance owing to the credit grantor.
Guarantor of borrower's obligations
28 A guarantor of a borrower's obligations may rely on every defence, including a right of set-off, that is available to the borrower in respect of those obligations. But the guarantor cannot use the fact that the borrower is an infant or bankrupt as a defence.
Assignee of credit grantor's rights
29(1) The rights conferred on a credit grantor by this Act pass to, and may be exercised by, a person claiming through or under the credit grantor, even if they were not expressly assigned to the person. But an assignee of a credit grantor's rights under a credit agreement has no greater rights or powers than the credit grantor, and is subject to all the duties, powers, obligations and restrictions that apply to the credit grantor.
Limit to borrower's claim against assignee
29(2) Despite subsection (1), the borrower is not entitled to recover from, or to set off against, the assignee more than the portion of the outstanding balance that was assigned to the assignee. If the assignee further assigns those rights and no longer holds the rights under the agreement, the borrower cannot recover from that first assignee more than the amount, if any, paid by the borrower to that assignee.
29(3) The cancellation of an agreement by any buyer under Part VII (Direct Sellers) is effective against an assignee of the seller.
Set-off for breach of condition or warranty
29(4) Subject to subsection 30(2), a breach of a condition or warranty implied by section 58 may be set off by
(a) a buyer against a claim made by an assignee of the seller to the goods, the payment of the purchase price, the cost of credit or rent, or a promissory note given in respect of the purchase;
(b) a holder of a promissory note, whether or not it discloses the purpose for which it was given; or
(c) a person claiming the goods by paramount title to that of the seller, if the person consented, either expressly or by implication, to the seller's selling or letting of the goods.
29(5) The amount that may be set off under clause (4)(a) or (b) may not exceed the amount limited by subsection (2). The amount that may be set-off under clause (4)(c) may not exceed the lesser of
(a) the cash price of the goods; and
(b) the outstanding balance.
Notice to assignee of credit agreement re credit sale
30(1) Before assigning the credit grantor's rights under a credit sale, a credit grantor must disclose to the prospective assignee in writing that the credit agreement was for a credit sale.
Innocent assignee's exemption from liability
30(2) A person who takes an assignment of a credit grantor's rights under a credit sale is not affected by the liabilities and restrictions imposed on a credit grantor in sections 25 and 26 (credit sales), sections 47 to 50 (default on credit sales) or on a seller by Part VI (Statutory Warranties), if the person took the assignment for value and without notice that the credit agreement was for a credit sale.
30(3) The onus is on the assignee to prove that the assignment was taken for value and without notice that the credit agreement was for a credit sale.
31(1) An assignee of a credit grantor's rights under a credit agreement is liable for compensation or to provide a refund under Division 6 for a contravention of this Act by the credit grantor only if
(a) the assignee knew of the contravention before the borrower received notice of the assignment;
(b) the contravention consists of the credit grantor's failure to deliver a disclosure statement to the borrower when required by this Part; or
(c) the contravention is apparent on the face of a disclosure statement, or by comparing the disclosure statement with the written terms of the credit agreement.
Reliance on borrower's acknowledgment
31(2) The assignee is entitled to rely in good faith on the borrower's signed acknowledgment of receipt of a disclosure statement.
32 When assigning a promissory note that secures or evidences a borrower's obligation under a credit agreement, the credit grantor must provide the assignee with a copy of the agreement.
RELIEF AGAINST ACCELERATION AND FORFEITURE
Application of sections 33.1 to 33.8
33(1) Sections 33.1 to 33.8 apply to any debt owing by a borrower to a credit grantor that is payable by instalments, other than
(a) a debt secured on real property;
(b) a debt that arose out of a sale of real property; and
(c) a debt owed by a corporation.
33(2) In this section "real property" includes a leasehold interest in real property.
Default charges: monetary obligations
33.1 No agreement creating or relating to a debt shall provide for a charge to be paid upon a default in the payment of an instalment, unless it reasonably represents one or more of the following costs incurred by the credit grantor as a result of the default:
(a) legal costs incurred in collecting or attempting to collect the amount in arrears;
(b) costs incurred by the credit grantor in protecting the collateral after default or in seizing or holding the collateral or repairing it or preparing it for sale;
(c) costs incurred because a cheque or other payment instrument given by the borrower to the credit grantor was dishonoured.
33.2(1) Subject to the restrictions set out in subsection (2), a provision in an agreement providing that, in the event of a default in payment of an instalment, the full balance will or may become immediately due and owing is valid and enforceable.
33.2(2) The restrictions referred to in subsection (1) are as follows:
(a) if the debt arises out of a sale of goods or goods and services, or a retail hire-purchase of goods, and the seller has not seized the goods or commenced an action to recover the balance of the debt, the buyer may pay the instalments in arrears plus the default charges as provided in section 33.1, and in that case payment of the balance must not be accelerated by reason of any default so remedied;
(b) if the debt arises out of a sale of goods or goods and services, or a retail hire-purchase of goods, and the seller is entitled to seize the goods and has so seized them, the seller is to proceed in accordance with section 45, and if the buyer redeems the goods in accordance with that section, payment of the balance must not be accelerated by reason of any default so remedied;
(c) if the debt is secured by a chattel mortgage, the mortgagor is entitled to relief from acceleration as provided in section 14 of The Mortgage Act;
(d) in any other case, the borrower may, at any time before an action is commenced to recover the balance of the debt, pay the instalments then in arrears with the default charges on them as provided by section 33.1, and in that case payment of the balance must not be accelerated by reason of any default so remedied;
(e) in any case in which an action has been commenced to recover the balance of the debt, the court may grant relief against acceleration on any terms that it sees fit;
(f) in any case in which a credit grantor is claiming accelerated payment and the borrower does not make the payments required to obtain relief under clause (a), (b), (c) or (d) or is not granted relief under clause (e), the credit grantor may not recover more than the total of
(i) the amount that the borrower would have had to pay in order to prepay the outstanding balance at the time of the default on which the claim for acceleration is based, and
(ii) interest on the amount determined under subclause (i) from the time of default at the rate set out in the credit agreement.
33.2(3) In any case in which a borrower has been granted an extension of time, the time of default referred to in subclause (2)(f)(i) is the time when the borrower fails to comply with the terms of the extension.
Meaning of "payments in default"
33.2(4) Except where expressly so stated, references in this Act to payments in default do not include any payments that have become due by virtue of any provision for the acceleration of payments.
Acceleration provisions continue in effect
33.2(5) A provision for acceleration of payments on default operates from time to time as and when default occurs, and the fact that a borrower has been relieved from acceleration in accordance with this section does not preclude its operation in respect of subsequent defaults.
33.3 A provision in an agreement creating or relating to a debt payable by instalments to which this Part applies that imposes on the borrower, as a consequence of default in payment of an instalment, a pecuniary penalty that is not permitted by section 33.1 or 33.2, is void.
Default charges: non-monetary obligations
33.4 If a borrower defaults on a non-monetary obligation under a credit agreement, the credit grantor may recover from the borrower, as damages for the default, no more than the reasonable expenses incurred and the amount of any loss suffered by the credit grantor because of the default. But if the agreement establishes a monetary penalty for the default, the amount recoverable also cannot be more than the amount of that penalty.
Relief against acceleration, seizure and forfeiture
33.5 If an agreement creating or relating to a debt imposes on the borrower an obligation in addition to the payment of the debt, and provides that, in the event of a breach of the obligation,
(a) payment of the debt shall be accelerated;
(b) the credit grantor may seize or take possession of any goods; or
(c) the interest of the borrower in any goods is or may be forfeited;
the court may relieve the borrower from the effect of the provision on any terms that it sees fit.
Absolute discretion of creditor
33.6(1) A provision in an agreement creating or relating to a debt that gives, or has the effect of giving, the credit grantor the right to decide whether any given fact or circumstance exists, is void.
33.6(2) Despite subsection (1), an agreement may contain a provision that, if the credit grantor has reasonable cause to believe that the security for the debt is in jeopardy,
(a) payment of the debt shall be accelerated;
(b) the credit grantor may seize or take possession of any goods; or
(c) the interest of the borrower in any goods is or may be forfeited;
or any two or all of those provisions. In that case, it is a question of fact for the court whether or not the credit grantor has reasonable cause for such a belief, but if the credit grantor has such cause at the relevant time, it is immaterial whether or not the security is actually in jeopardy.
33.6(3) The court may relieve the borrower from the effect of a provision mentioned in subsection (2) on such terms as it thinks fit.
33.7 The court may grant relief under sections 33.5 and 33.6 at any time, and may do so either in a proceeding commenced by the credit grantor to enforce security or on an application by the borrower. But if the credit grantor gives the borrower written notice that
(a) specifies the breach complained of, or the facts relied on as giving reasonable cause for the credit grantor's belief, as the case may be;
(b) informs the borrower of his or her right to apply for relief; and
(c) requires the borrower to apply for such relief within 20 days;
the borrower's right to apply for relief expires at the end of those 20 days.
33.8(1) If a credit grantor attempts to seize any goods or commences an action with respect to goods or the payment of money owing in respect of them, and the borrower pays the instalments in arrears, any default charges as provided in section 33.2 and his or her taxable costs in the action, if any, the seizure or action shall be stayed.
Return of seized goods where default remedied
33.8(2) If a credit grantor seizes any goods and the borrower remedies the default or otherwise obtains relief under this Part, the credit grantor must return the goods to the borrower on payment by the borrower, in addition to any other payment required by this Part, of the costs of seizure in an amount not exceeding that permitted by The Distress Act.
DIVISION 2
FIXED CREDIT
34 This Division applies only to advertisements and credit agreements for fixed credit.
CREDIT SALES
Credit sales must have scheduled payments
34.1 A credit agreement for a credit sale must provide for the outstanding balance to be repaid according to a schedule of payments, which may be subject to adjustments to accommodate contingencies such as a change in the interest rate.
DISCLOSURE IN ADVERTISING
34.2(1) An advertisement for fixed credit that states an interest rate or the amount of a payment must disclose the APR of the credit and the term over which it is to be extended.
34.2(2) If the advertisement is for a credit sale of a specific product, it must also disclose the cash price of the product.
34.2(3) Subject to the regulations, if the advertisement is for a credit sale involving a non-interest finance charge, it must also disclose the cash price and the cost of credit.
Disclosure for representative transaction
34.2(4) If the information required by subsections (1) to (3) to be disclosed in an advertisement is not the same for all transactions to which the advertisement relates, the information may be for a representative transaction if the advertisement states that it is for a representative transaction.
DISCLOSURE STATEMENTS
34.3 The initial disclosure statement for a credit agreement for fixed credit must be dated and must disclose as much of the following information about the agreement as is applicable:
(a) if the agreement is for a credit sale, a description of each product sold;
(b) the total value received or to be received by the borrower under the agreement, and a breakdown of the total value showing the nature, timing and amount of each advance;
(c) if the agreement provides for scheduled payments,
(i) the total value given or to be given by the borrower under the agreement, and a breakdown of the total value showing the nature, timing and amount of each payment to be made by the borrower,
(ii) the term over which the credit is to be extended, and the outstanding balance at the end of the term if all scheduled payments are made,
(iii) the amortization period, if it is longer than the term, and
(iv) the cost of credit;
(d) the date on which interest begins to accrue and the particulars of any grace period;
(e) the interest rate, and how interest is calculated and compounded;
(f) the method of applying each payment to the accumulated cost of credit and to the principal;
(g) if the interest rate might change during the term,
(i) the initial interest rate,
(ii) the method of determining the interest rate throughout the term, and
(iii) unless the amount of a scheduled payment is adjusted automatically to account for changes in the interest rate, the lowest annual interest rate — based on the initial outstanding balance — at which a scheduled payment would not cover the interest that would accrue between payments;
(h) the APR;
(i) the nature of, and the amount and timing of payments for, each non-interest finance charge;
(j) if the borrower has paid, or is liable to pay, a brokerage fee, the amount of that fee;
(k) the nature of, and the amount and timing of, any default charges;
(l) a description of each item of collateral sufficient to identify it as collateral under the agreement;
(m) for a credit agreement other than a mortgage, a statement that the borrower is entitled to prepay the outstanding balance at any time without charge or penalty and is entitled to make partial prepayments without charge or penalty on any scheduled payment date;
(n) for a mortgage, a statement of the conditions, if any, under which the borrower may make a prepayment, and any charge for a prepayment;
(o) the nature of, and the amount and timing of payments for, any optional services purchased by the borrower for which payment is to be made to or through the credit grantor;
(p) if any optional services are to be provided by the credit grantor or an associate of the credit grantor, a statement of the borrower's right under section 23 to cancel those services;
(q) if the agreement does not provide for scheduled payments, the circumstances in which all or any part of the outstanding balance must be paid, or a reference to the provisions of the agreement that describe those circumstances;
(r) if the lender requires the borrower to obtain insurance as a condition of the credit agreement, a statement that the borrower has the right to obtain the insurance from any insurer authorized by law to provide it;
(s) any additional information prescribed by regulation.
Periodic disclosure: floating interest rate
34.4(1) If the interest rate is a floating rate, the credit grantor must give to the borrower, at least once every 12 months, a supplementary disclosure statement containing the following information for the period covered by the statement:
(a) the annual interest rate at the beginning and end of the period;
(b) the outstanding balance at the beginning and end of the period;
(c) if the agreement provides for scheduled payments, the amount and timing of all remaining payments, based on the annual interest rate at the end of the period.
Disclosure: increase in non-floating interest rate
34.4(2) If the interest rate is not a floating rate, and is increased during the term of the credit agreement to a rate that is at least one percentage point higher than the rate most recently disclosed to the borrower, the credit grantor must give to the borrower within 30 days after the increase a supplementary disclosure statement containing the following information:
(a) the new annual interest rate;
(b) the date the new rate took effect; and
(c) how the amount or timing of any payment is affected by the change.
Failure to disclose increase within 30 days
34.4(3) An interest rate increase that must be disclosed under subsection (2) is not effective more than 30 days before the day on which it disclosed.
Additional disclosure: amendments
34.5(1) If, because of an amendment to the credit agreement, information disclosed under this Division is no longer correct, the credit grantor must give to the borrower, within 30 days after the amendment is made, a supplementary disclosure statement setting out the correct information.
When additional disclosure not required
34.5(2) The credit grantor need not give a supplementary disclosure statement if the amendment does not result in an increase to the cost of credit or the APR.
Notice that payments will not cover interest
34.6 The credit grantor must notify the borrower that the scheduled payments will not cover the interest that accrues between payments, if that occurs because of an increase in the principal resulting from a missed or late payment or a default charge. The notice must be given, in writing, within 30 days after the date of the increase.
RENEWAL OF CREDIT AGREEMENTS OTHER THAN MORTGAGES
34.7(1) This section does not apply in relation to a mortgage registered under The Real Property Act.
34.7(2) When a credit agreement for fixed credit is to be renewed, the credit grantor must deliver to the borrower, on or before the renewal date, a disclosure statement containing the following information:
(a) the renewal date;
(b) the outstanding balance as of the renewal date;
(c) any non-interest finance charges payable in connection with the renewal;
(d) the relevant interest rate information referred to in clauses 34.3(e) and (g);
(e) the APR;
(f) the amount and timing of all payments to be made after the renewal date;
(g) the total of all payments to be made after the renewal date;
(h) the cost of credit under the renewed agreement;
(i) the term over which credit will be extended under the renewed agreement;
(j) the amortization period.
MORTGAGE RENEWAL
34.8(1) If the amortization period for a mortgage registered under The Real Property Act is longer than its term, the credit grantor must, at least 21 days before the end of the term, give written notice to each person entitled to disclosure stating whether the credit grantor is willing to renew the mortgage for a further term.
Disclosure on mortgage renewal
34.8(2) A credit grantor who is willing to renew a mortgage must include with the notice referred to in subsection (1) a disclosure statement containing the following information:
(a) information about the renewal that corresponds with each category of information required under section 34.3, based on the assumption that the borrower will make any payments that are due under the mortgage up to the renewal date;
(b) the renewal date;
(c) the outstanding balance as of the renewal date;
(d) any non-interest finance charges payable in connection with the renewal.
Terms of renewed mortgage differ from disclosure statement
34.8(3) If the terms of the renewed mortgage differ from the terms set out in the disclosure statement given under subsection (2) in that
(a) the outstanding balance differs from that stated in the disclosure statement due to a missed, late, early or extra payment;
(b) the interest rate differs from that stated in the disclosure statement; or
(c) the amortization period or frequency of payments differs from that stated in the disclosure statement;
the credit grantor must give a revised disclosure statement to each person entitled to disclosure within 30 days after the effective date of the renewed mortgage, containing the correct terms.
Borrower may prepay if no disclosure or incomplete
34.8(4) If the credit grantor
(a) does not give a disclosure statement to each person entitled to disclosure within the time required by subsection (1); or
(b) gives a person entitled to disclosure a disclosure statement that does not contain all the information required by subsection (2);
the borrower may prepay the outstanding balance of the renewed mortgage without penalty at any time within 21 days after the renewal date of the mortgage.
Borrower may prepay if improper disclosure
34.8(5) If a credit grantor gives a disclosure statement to a person entitled to disclosure that does not reflect the actual terms of the renewed mortgage, and does not give a revised disclosure statement to that person containing the correct terms in the time period required by subsection (3), the borrower may prepay the outstanding balance of the renewed mortgage without penalty at any time within 21 days after that period expires.
Charges related to renewal to be refunded
34.8(6) If the borrower exercises a right of prepayment under subsection (4) or (5), the lender must refund to the borrower any non-interest finance charges imposed in connection with the renewal.
DIVISION 3
OPEN CREDIT
35 This Division applies only to advertisements and credit agreements for open credit.
DISCLOSURE IN ADVERTISING
Disclosure: advertisement for open credit
35.1 An advertisement that gives any specific information about the cost of open credit must disclose the current annual interest rate and any non-interest finance charges for the credit.
DISCLOSURE STATEMENTS
Contents of initial disclosure statement
35.2 The initial disclosure statement for a credit agreement for open credit must be dated and must disclose as much of the following information about the agreement as is applicable:
(a) the credit limit, unless there is none or it is otherwise disclosed in the first statement of account or in a separate statement no later than when the borrower receives the first statement of account;
(b) the minimum periodic payment, or the method of determining it;
(c) the initial annual interest rate and the compounding period;
(d) if the agreement is associated with a credit card, the manner in which interest is calculated;
(e) if the annual interest rate may change, the method of determining the annual interest rate at any time;
(f) when interest begins to accrue on advances or different types of advances, and the particulars of any grace period;
(g) the nature and amount, or the method of determining the amount, of any non-interest finance charges that may become payable;
(h) if the borrower has paid or is liable to pay a brokerage fee, the amount of that fee;
(i) if the agreement is associated with a credit card, the borrower's maximum liability for debts incurred through unauthorized use of the card if it is lost or stolen;
(j) if the borrower purchases an optional service and is required to make payments for it to or through the credit grantor, a description of
(i) the service and the charges for it, and
(ii) the borrower's right to cancel the service under section 23, if the service is to be provided by the credit grantor or an associate of the credit grantor,
unless the description is provided to the borrower in a separate statement before the service is provided or begun to be provided;
(k) if the lender requires the borrower to obtain insurance as a condition of the credit agreement, a statement that the borrower has the right to obtain the insurance from any insurer authorized by law to provide it;
(l) a description of the collateral under the agreement;
(m) the nature and amount, or the method of determining the amount, of any default charges;
(n) how often the borrower will receive statements of account;
(o) a telephone number that the borrower can call for information about his or her account without being charged for the call;
(p) any additional information prescribed by regulation.
Frequency of statements of account
35.3(1) The credit grantor must provide the borrower with a statement of account at least monthly. But the credit grantor is not required to provide a statement of account to the borrower at the end of a period during which there have been no advances or payments, if
(a) the outstanding balance is nil; or
(b) the borrower is in default and the credit grantor has demanded payment of the outstanding balance and notified the borrower that the privilege of obtaining advances under the agreement has been cancelled or suspended.
Disclosure in statement of account
35.3(2) Each statement of account must disclose as much of the following information as is applicable:
(a) the period covered by the statement;
(b) the outstanding balance at the beginning of the period;
(c) the amount, description and posting date of each transaction or charge added to the outstanding balance during the period;
(d) the amount and posting date of each payment or credit subtracted from the outstanding balance during the period;
(e) the annual interest rate or rates in effect during the period or during any part of the period, and the amount of any change in the rate from the previous statement period;
(f) the total of all amounts added to the outstanding balance during the period;
(g) the total of all amounts subtracted from the outstanding balance during the period;
(h) the outstanding balance at the end of the period;
(i) the credit limit;
(j) the minimum payment;
(k) the due date for payment;
(l) the amount that the borrower must pay on or before the due date in order to take advantage of a grace period;
(m) the borrower's rights and obligations regarding the correction of billing errors;
(n) a telephone number that the borrower can call for information about his or her account without being charged for the call;
(o) any additional information prescribed by regulation.
35.3(3) A transaction is sufficiently described for the purpose of clause (2)(c) if it enables the entry in the statement of account to be matched to a transaction record provided to the borrower along with the statement of account or at the time of the transaction.
CREDIT CARDS
No issuance of unsolicited credit cards
35.4(1) No person shall issue a credit card to a person who has not applied for it, unless the card is being issued under a credit agreement to renew or replace a card previously issued under that agreement.
35.4(2) The onus of proving that the person applied for a credit card is on the person who issued the card.
Rates and fees to be disclosed in solicitation
35.5(1) No person shall directly solicit another person, in person, by mail, or by phone or other electronic means, to apply for a credit card, unless the interest rate and other fees in effect at the time of solicitation are prominently disclosed.
35.5(2) An application form for a credit card must disclose
(a) the following information, and the date to which each is current:
(i) if the interest rate is a floating rate, the index rate and the relationship between it and the annual interest rate,
(ii) the annual interest rate, if it is not a floating rate,
(iii) the grace period, if any,
(iv) the amount of any non-interest finance charges; or
(b) a telephone number that the applicant can call to obtain the information referred to in clause (a) without being charged for the call.
35.5(3) If a borrower applies for a credit card in person, or by telephone or any electronic means, the card issuer must disclose the information referred to in clause (2)(a) when the borrower makes the application.
Requirement for initial disclosure statement
35.5(4) Nothing in this section relieves a credit card issuer from the obligation to provide an initial disclosure statement under section 35.2.
Time of entering into credit agreement
35.6 A person who applies for a credit card without signing an application form is considered to enter into a credit agreement in relation to that card upon using the card for the first time.
Prior notice of change in information
35.7(1) No change in the information disclosed to a credit card holder in a disclosure statement shall take effect until at least 30 days after the holder has been given notice of the change, unless the change is
(a) a change in the credit limit;
(b) a decrease in the interest rate or the amount of any other charge;
(c) an increase in the length of an interest-free period or grace period; or
(d) a change in a floating rate.
35.7(2) A change described in any of clauses (1)(a) to (d) must be disclosed to the credit card holder in the first statement of account to follow the change, or in a separate document that accompanies the statement.
Liability for unauthorized use of lost or stolen card
35.8(1) Subject to subsection (2), if a credit card is lost or stolen, the card holder
(a) is not liable for any debt incurred through unauthorized use of the card after the card issuer is notified of the loss or theft; and
(b) is liable for no more than a total of $50., or any lesser amount set out in the credit agreement, for debts incurred through unauthorized use of the card before the card issuer is notified of the loss or theft.
Regulations may exempt transactions
35.8(2) Subsection (1) does not apply in respect of a transaction prescribed by regulation.
Liability for unauthorized use of credit card information
35.8(3) A credit card holder is not liable for a debt incurred through unauthorized use of credit card information if, within 30 days after the date of issue of the first statement of account to include the debt, the holder notifies the credit card issuer of any unauthorized use.
35.8(4) Notice of the loss or theft of a credit card, or of an unauthorized use of credit card information, may be given orally or in writing.
35.8(5) Except in the case of a transaction prescribed in the regulations, the onus of proving that the person using a credit card or credit card information was authorized to do so is upon the issuer of the card.
35.9(1) When a credit card holder surrenders a credit card to the issuer or agent of the issuer of the card, the issuer or agent must give the holder a receipt for the card. If it is surrendered to an agent, the agent
(a) must promptly forward the card to the issuer, notifying the issuer of the surrender; and
(b) is responsible for any unauthorized use of the card between the time the card is surrendered and the time it is received by the issuer.
Holder not liable after surrender of card
35.9(2) The credit card holder is not liable for any debt incurred through the unauthorized use of a credit card after he or she has surrendered it to the issuer or an agent of the issuer of the card.
DIVISION 4
LEASES
GENERAL PROVISIONS
36 The following definitions apply in this Division.
"cash value" of leased goods means
(a) the price for which the lessor sells like goods to cash customers or, if the lessor does not sell like goods to cash customers, the lessor's reasonable estimate of the price that cash customers would pay for the leased goods; or
(b) any lower amount that the lessor and the lessee agree is the cash value. (« valeur au comptant »)
"estimated residual value" of leased goods means the amount reasonably estimated by the lessor at the beginning of the lease to be their wholesale value at the end of the lease. (« valeur résiduelle estimative »)
"option price" means the amount of an additional payment a lessee must make to exercise a purchase option. (« prix de l'option »)
"periodic payments" means the payments, other than taxes, that a lessee is required to make at regular intervals under a lease. (« versements périodiques »)
"purchase option" means an option under a lease for the lessee to acquire title to the leased goods at or before the end of the lease. (« option d'achat »)
"residual obligation" means a lessee's obligation to pay to the lessor, at the end of a lease, an amount based wholly or partly on the difference, if any, between
(a) the realizable value of the leased goods at the end of the lease; and
(b) the estimated residual value of the leased goods. (« obligation résiduelle »)
"term", in relation to the duration of a lease, means the period during which the lessee is entitled to possession of the leased goods, assuming no default under the lease. (« durée »)
37 Subject to subsection 4(2), this Division applies to a lease that
(a) has a fixed term of at least four months;
(b) has an indefinite term;
(c) is renewed automatically if neither party does anything to prevent its renewal; or
(d) has a residual obligation;
and that is not exempted by regulation from the application of this Division.
DISCLOSURE IN ADVERTISING
38(1) An advertisement that gives any specific information about the cost of a lease must disclose the following information:
(a) that the advertised transaction is a lease;
(b) the term of the lease;
(c) the amount and timing of any payments that would be required at or before the beginning of the term;
(d) the amount and timing of the periodic payments;
(e) the amount of any other payments, other than taxes, that a lessee would be required to make in the ordinary course of events;
(f) the APR of the lease;
(g) if required by regulation, prescribed information regarding extra charges based on use of the leased goods.
38(2) If the information to be disclosed under subsection (1) is not the same for all leases covered by the advertisement, the information disclosed may be for a representative transaction if the advertisement states that it is for a representative transaction.
Advertising in prescribed medium
38(3) Despite subsection (1), an advertisement on radio or television or in a medium prescribed by regulation may, instead of disclosing the lease's term and APR, disclose
(a) a telephone number a person can call to obtain the information without incurring any charge for the call;
(b) the address of an Internet website that contains the information; or
(c) a reference to a publication with general circulation in the area of the advertisement's reach that contains the information.
Records to be kept for three months
38(4) A lessor who advertises a telephone number or website address where the information to be disclosed can be obtained must keep, for at least three months after the advertisement is last publicized, a copy of the telephone script or Internet document that contains the information.
Director entitled to copy of record
38(5) On request of the director, a lessor must provide a copy of a record described in subsection (4) to the director.
DISCLOSURE STATEMENTS
39(1) The initial disclosure statement for a lease must disclose as much of the following information about the lease as is applicable:
(a) that the transaction is a lease;
(b) a description of the leased goods;
(c) the term of the lease;
(d) the cash value of the leased goods at the beginning of the lease;
(e) the nature and amount of any advances received or charges incurred by the lessee at or before the beginning of the term;
(f) the nature and amount of each payment made or to be made by the lessee at or before the beginning of the term;
(g) the amount to be capitalized under the lease, which is
(i) the total of the cash value of the leased goods and any advances made or to be made to the lessee at or before the beginning of the term,
less
(ii) the total of the amounts paid or to be paid by the lessee at or before the beginning of the term, not including any refundable security deposit or any of the periodic payments;
(h) the amount, timing and number of the periodic payments;
(i) the estimated residual value of the leased goods;
(j) if the lease has a purchase option,
(i) how and when the option may be exercised,
(ii) the option price if the option is exercised at the end of the term, and
(iii) the method of determining the option price if the option is exercised before the end of the term;
(k) if the lease has a residual obligation, the amount of the obligation or the method of determining the amount;
(l) any circumstances under which either party may terminate the lease before the end of the term, and the amount, or method of determining the amount, of any payment that the lessee will be required to make on early termination of the lease;
(m) any circumstances in which the lessee may be required to make a payment not referred to in clauses (a) to (l), and the amount of the payment or the method of determining the amount;
(n) the APR of the lease;
(o) if the lessee has paid, or is liable to pay, a brokerage fee, the amount of that fee;
(p) the nature of, and the amount and timing of payments for, any optional services purchased by the lessee for which payment is to be made to or through the lessor;
(q) if any optional services are to be provided by the lessor or an associate of the lessor, a statement of the lessee's right under section 23 to cancel those services;
(r) the total of all non-refundable payments made or required to be made by the lessee in connection with the lease in the ordinary course of events;
(s) the implicit finance charge, as determined by the following formula:
I = A + B − C
In this formula,
I
is the implicit finance charge,
A
is total of the non-refundable payments referred to in clause (r),
B
is
(i) if the lease has a purchase option, the option price or the estimated residual value, whichever is less, or
(ii) if it does not have a purchase option, the estimated residual value plus any additional amount payable in the ordinary course at the end of the term,
C
is the total of all advances made to the lessee in connection with the lease;
(t) any other information required by the regulations.
Additional disclosure: amendments
39(2) If information disclosed under this Division is no longer correct because of an amendment to the lease, the lessor must deliver to the lessee, within 30 days after the amendment is made, a supplementary disclosure statement setting out the correct information.
Additional disclosure not required
39(3) The lessor need not give a supplementary disclosure statement if the amendment does not result in an increase to the APR.
Maximum residual obligation determined by regulation
40 A lessor is not entitled to require or accept, in respect of a residual obligation, the payment of an amount greater than the maximum residual obligation calculated in accordance with the regulations.
41 When a lessee remedies a default under a lease, the lease is reinstated as if the default had not occurred, and the lessor cannot later deny any right that the lessee would otherwise have had to purchase the leased goods or to retain possession of them at the end of the lease.
DIVISION 5
DEFAULT
GENERAL PROVISIONS
42 This Division does not apply in relation to a mortgage registered under The Real Property Act.
Rights and remedies cumulative
43(1) The rights and remedies in this Division are in addition to, and do not affect, the rights and remedies provided for in an agreement, elsewhere in this Act, in any other Act, or at law.
43(2) If there is a conflict between a provision of this Division, or a regulation made in relation to such a provision, and a provision of an agreement or of any other Act, the provision of this Division or the regulation prevails.
SEIZURE AND SALE
Restriction on seizure if less than 25% owing
44(1) If a borrower defaults on a credit agreement when the outstanding balance secured by collateral is less than 25% of the total of the amounts advanced under the agreement, the credit grantor is entitled to seize or repossess the collateral only with
(a) the court's approval, which may be given on any terms the court thinks fit; or
(b) the borrower's written consent, given at the time of the seizure or repossession.
44(2) The court may, without notice to the borrower, approve an application made under this section if
(a) the borrower cannot be found or is evading service;
(b) there is reasonable cause to believe that the borrower might hide the goods or otherwise attempt to avoid seizure or repossession of them if he or she had notice of the application; or
(c) the court for any other reason sees fit to dispense with the notice.
44(3) A credit grantor who obtains the court's approval under this section without notice to the borrower must give to the borrower, at the time of seizing or repossessing the goods, or as soon after that as is possible,
(a) a copy of the court order;
(b) a notice, in a form approved by the judge who made the order, of the borrower's rights under subsection (4) to apply to have the order set aside; and
(c) notice of the seizure or repossession, containing the information required under subsection 45(1).
Application to set aside order made without notice
44(4) Within 20 days after being given a copy of the order and the notices under subsection (3), the borrower may apply to the court to have the order set aside. The court may make any order it thinks fit having regard to all the relevant circumstances.
45(1) Within 48 hours after seizing or repossessing collateral under a credit agreement, the credit grantor must give the borrower a written notice of seizure setting out the following:
(a) a description of the collateral and the date that it was seized or repossessed;
(b) the place where the collateral is or will be kept;
(c) a description of the borrower's default, and the sums in arrears, ignoring the operation of any acceleration clause in the agreement;
(d) the amount that will be charged to the borrower in accordance with this Part because of the default or, if the amount has not been determined, a reasonable estimate of that amount;
(e) the outstanding balance under the agreement, excluding the amount referred to in clause (d);
(f) if the borrower is entitled to cure the default and reinstate the credit agreement,
(i) the action that the borrower must take to cure the default, and
(ii) a statement that the borrower may cure the default and reinstate the credit agreement by taking that action at any time before the collateral is sold or retained by the credit grantor in satisfaction of the obligation secured by it;
(g) a statement that the collateral will not be sold for at least 20 days.
45(2) At least 20 days before disposing of the collateral, the credit grantor must give the borrower a notice of sale that sets out the following:
(a) all of the information to be included in the notice of seizure of the collateral;
(b) the following particulars of a proposed sale of the collateral:
(i) if it is to be sold by public auction, the date, time and place of the auction,
(ii) if it is to be sold by acceptance of a closed tender, the deadline for delivery of closed tenders and the place to which they must be delivered,
(iii) if it is to be sold privately or in the course of the credit grantor's business, the date after which it may be sold.
45(3) The notices under this section may be combined into one notice of seizure and sale, which must be given to the borrower within 48 hours after the collateral is seized or repossessed and at least 20 days before it is sold.
Notice to persons other than the borrower
45(4) In addition to giving a notice to the borrower under subsection (2) or (3), the credit grantor must, at least 20 days before selling the collateral, give a copy of the notice to each person who
(a) has registered a financing statement in relation to the collateral in the registry established under The Personal Property Security Act; or
(b) has an interest in the collateral and has given written notice of that interest to the credit grantor.
CREDIT SALES
46 &nbs