Home Renovation Contractors and the Ontario Consumer Protection Act 



Fall 2010

Commercial Litigation Brief Fall 2010

The Ontario Consumer Protection Act, 2002 (the "CPA"), which has been in force since 2005, sets out various rules which businesses must be aware of when dealing with customers. This article addresses how the CPA affects businesses offering home repair and renovation services, and the risks that those businesses run if they are not familiar with the requirements of the CPA. As discussed below, there are strict rules that contractors must follow when dealing with home repairs and renovations, and a contractor takes substantial risks if it does not comply with the detailed CPA requirements.

The Consumer Protection Act

With few exceptions, any agreement (whether written or verbal) where an individual is paying for goods or services for personal, family or household purposes must comply with the CPA. This covers a wide range of matters such as debt collections, gym memberships, motor vehicle repairs and pay-day loans.

The CPA provides general obligations for any consumer-related business. The primary obligation requires any business to avoid making false, misleading or deceptive representations (such as making misleading statements about the quality of a product or service, or hiding the fact that a product is refurbished). There are also various specific obligations imposed on different types of relationships, such as gyms, garages and pay-day loan companies.

The Application of the CPA to Renovations and Home Repairs

According to the Ontario Ministry of Consumer Services, the second most common type of complaint under the CPA in 2009 was for home repairs and renovations. While a number of these complaints arise out of scams perpetrated on customers, many arise due to pitfalls that may surprise many reputable contractors.

Although home repair and renovation agreements are not specifically referred to in the CPA, a typical repair or renovation agreement will trigger certain provisions of the CPA. This is because of two typical qualities of a home repair or renovation agreement: (1) the negotiation process often involves a visit to the home by the contractor, and (2) any significant home repair or renovation will be done over a period of time, rather than as an on the spot repair. These qualities make a home repair or renovation agreement both a "direct agreement" (an agreement negotiated outside of the contractor's place of business) and a "future performance agreement" (an agreement that is completed in the future).

For future performance or direct agreements, all consumer agreements must be in writing, and meet each of the following requirements:

  • The home owner must know exactly who he or she is dealing with, and how to contact the contractor. The contractor's name, telephone number and any fax number or e-mail address, as well as the name of the individual(s) who the home owner dealt with, must be included in the contract.
  • A "fair and accurate description" of the goods and services must be set out in the contract. While what constitutes a "fair and accurate description" will depend on each individual case, it must be more than simply a generic description.
  • The contract must set out an "itemized list of the prices at which the goods and services are to be supplied", and must state the "total amount that the [contractor] knows is payable by the consumer". Open ended contracts, or contracts with hidden fees, are not permitted. If the price changes during the course of work, it will typically need to be the subject of an amending agreement.
  • The start and end dates of the project must be specified. As with price, if the start and end dates change, an amending agreement will typically be needed.
  • As a direct agreement, every contract must contain a detailed disclaimer regarding a home owner's rights under the CPA. The exact wording of the required disclaimer is set out in the CPA, and must be displayed prominently in a contract..

 In certain circumstances, the home owner may also be entitled to a 10-day "cooling off " period during which they can cancel the agreement for any reason.

A failure to meet any of these requirements has serious consequences. The Ministry of Consumer Services, which enforces the CPA, can charge an individual or company for failing to comply with the CPA. If convicted, fines can be imposed of up to $250,000.

Even if you are not charged by the Ministry of Consumer Services, home owners have civil remedies under the CPA. Primarily, any agreement that does not meet the requirements discussed above is considered to be void, and home owners have the right to cancel contracts that do not meet the provisions of the CPA at any time within one year of entering into the agreement. In these circumstances, the default position is that no payment needs to be made under the contract, unless a court is convinced that it is unfair to deny payment. 1

Any contractor who deals directly with consumers should therefore review any standard form agreement to ensure that it complies with the CPA. Any standard form agreement must contain the business' contact information and the specified disclaimer language. It should also be designed to encourage inclusion of information such as specific prices and detailed descriptions, to promote good practices. Above all else, every individual who is involved in contracting with consumers should be familiar with the everyday requirements of the CPA, and aware of the risks of cutting corners when preparing agreements.

This article appeared in Lang Michener's Commercial Litigation Brief Fall 2010.  

[1] See, for example, Reid v. R.L. Johnston Masonry Inc. (2009), 252 O.A.C. 13 (Div. Ct.)