Rules on Requirements for Amending Remote Agreements with Consumers

Under Ontario Consumer Protection law, in order to amend a remote agreement, the agreement must contain either a right on the consumer to terminate the agreement, or retain the existing agreement. An agreement that attaches conditions to the consumer's right to terminate if they do not agree with the amendment, even if such conditions are reasonable (such as consumer cannot be in default and has to pay costs), would be defective and may not be enforceable.

Section 42(2) of General, O. Reg. 17/05 under the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sch. A  states that:

A consumer agreement mentioned in subsection (1) that provides for amendment, renewal or extension may, in addition to being amendable, renewable or extendable under section 41, be amended, renewed or extended if the following conditions are satisfied:

1. The agreement indicates what elements of the agreement the supplier may propose to amend, renew or extend and at what intervals the supplier may propose an amendment, renewal or extension.

2. The agreement gives the consumer at least one of the following alternatives to accepting the supplier's proposal to amend, renew or extend:

i. terminating the agreement, or

ii. retaining the existing agreement unchanged.

3. The agreement requires the supplier to give the consumer advance notice of a proposal to amend, renew or extend.

(3) The amendment, renewal or extension takes effect on the later of, (a) the date specified in the notice; and (b) the date that is 30 days after the day on which the consumer receives the notice.

(4) The amendment, renewal or extension does not retroactively affect rights and obligations acquired by the consumer before the effective date of the amendment, renewal or extension.

The agreement in this case had two conditions attached to the consumer's ability to terminate the contract: (1) the consumer could not be in default under the agreement; and (2) the consumer had to pay the standard removal charges.

These conditions may well be reasonable but the Court felt that the resulting right to terminate was not unconditional and that the agreement therefore does not comply with s. 42 of the Regulation and was not binding on the consumer.

In order to amend a remote agreement, it must contain either an unconditional right on the consumer to terminate the agreement, or retain the existing agreement. The termination right must be unconditional. An agreement that attaches conditions to the right to terminate does not provide the consumer with a true alternative to accepting the amendment. Depending upon the conditions for termination, the consumer could effectively be coerced into accepting the proposed amendment. The Court of Appeal held that such an interpretation would be inconsistent with the consumer protection objective of the legislation.

The Court stated that allowing the supplier to attach reasonable conditions would add a level of uncertainty. The consumer would often not know for sure whether or not he or she was required to comply with the conditions imposed by the agreement as the cost of opting out of the proposed amendment. Such an interpretation would encourage litigation and undermine the consumer protection objectives of the provisions.

However, in this circumstance, the Court did invoke the proviso in s. 93(2) of the Act allowing the consumer to be bound by the defective agreement nonetheless, since it would otherwise be inequitable to not have a contract in place. The Court felt that in this case, no consumer, including the appellant, would be prejudiced by the proposed amendment and that the application had been brought for a collateral purpose and therefore dismissed the appeal.