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Consumers - Consumer contracts

Service contracts involving sequential performance

A new season has arrived and you vow to get into tip-top shape once and for all. Without delay, you sign up for modern dance classes, as well as aerobic classes. A few days into your new lifestyle, reality sets in and you realize that you’ve set your goals too high. Fortunately, the Consumer Protection Act allows you to cancel a contract extending over several weeks.

In this Infosheet, Éducaloi explains your rights and obligations regarding contracts of service involving sequential performance.

What is a contract of service involving sequential performance?

It’s a contract entered into with a company offering services over a period of days, weeks, or months.

Examples include language classes offered by private businesses, dance classes, speed-reading classes, and personal development classes.

Physical fitness studios also fall into this category, but they’re regulated by specific provisions (see the Infosheet entitled Contracts with physical fitness studios  (http://www.educaloi.qc.ca/en/loi/consumers/38/)).

What sort of information should the contract include?

You should always carefully read the contract before signing it. For your protection, the contract should include:

• your name and address;
  
• the merchant’s name and address;
  
• the date and location of the contract signing;
  
• a description of the services offered;
  
• the date on which services begin;
  
• the address where the services will be offered;
  
• the duration of the contract;
  
• the number of hours, days, or weeks over which the services are distributed (for example, 3 hours per week over 15 weeks);
  
• the hourly, daily, or weekly rate (this rate must remain the same for the entire duration of the contract);
  
• the total cost;
  
• the terms of payment.

The merchant must also attach a cancellation form to your copy of the contract.

A consumer can ask the court to annul his contract with the merchant if the contract does not contain the information required by law and if this lack of information has actually harmed him.

What are the terms of payment?

A merchant cannot require any payment until you have started receiving services.

In principle, a merchant cannot require you to pay for the services in a single payment. By law, the merchant must allow you to pay in at least two equal instalments paid at regular intervals.

There are some exceptions to the rule. If the total cost of the service is $100 or less, the merchant can ask you to pay in one single instalment. The same holds true for courses offered over three consecutive days or less. For example, if you’re taking an intensive, one-weekend self-defence course, the merchant may require you to pay the full amount of the contract in one single instalment.

If I change my mind, can I back out of such a contract?

It is always possible to cancel a contract of service involving sequential performance. However, depending on the situation, the merchant may be entitled to compensation for damages.

If you have not yet used the services, you can cancel the contract without having to pay a penalty.

If you have started using the services, you must pay for the services used as well as compensation to the merchant. This indemnity will be the lesser of the two following amounts: $50 or 10% of the cost of courses not taken.

For example, let’s say that your Spanish courses cost a total of $800. To date, you have taken $100 worth of classes. If you cancel now, you must pay $50, because 10% of the cost of the courses not yet taken ($700) equals $70. So in this case, the lesser amount is $50.
But if the amount of the courses not yet taken is $200, you would only have to pay $20 in damages (10% of $200).

Can a merchant require me to purchase his material for the course?

No. You are not obliged to buy books, cassettes, clothing, paintbrushes, canvas, or any other item from the merchant offering the course. The merchant has no right to require you to do so. If you decide to purchase materials from the merchant, the law requires a written contract where the materials cost more than $100. Such a contract must contain the following information:

• your address;
  
• the merchant’s address;
  
• a description of the material;
  
• the cash price of each item.

The merchant must also attach a cancellation form to your copy of the contract.

Can I cancel the sale contract for materials?

Yes, you can cancel such a contract without penalty if the amount exceeds $100 and if you cancel within one of the three following time limits:

• within 10 days of the delivery of the material;
  
• within 10 days after the course began;
  
• within 10 days after you cancelled the service contract.

The third option is applicable only if you have had possession of the merchandise for less than two months, or less than a third of the length of the contract, whichever one is shorter.

For example, suppose you are taking a karate course that lasts three months. If you were in possession of the karate uniform for one month and one week, you cannot cancel the material contract because in this situation, you were in possession of the material for longer than one-third of the duration of the course.

If the karate course was a one-year course, and you had possession of the uniform for three months, you would still not be allowed to cancel the material contract because you have exceeded the two-month limit. Even if three months is less than one-third of the contract’s duration, you have still exceeded the two-month limit. As mentioned above, the shorter of the two periods determines whether the contract can be cancelled.

If you have begun using the material, you must pay for the time that you used it. You also have to pay an indemnity of either $50 or 10% of the cost of the time you didn’t use – whichever amount is less. So, if you have used the material for 1 month of a 10-month contract, and the price of the contract is $80, then the use of the material will be $8. For the indemnity, you only need to subtract the cost of the time used ($8) from the total cost of the contract ($80), and then just pay 10% of the resulting amount. $80 minus the total usage time equals $72. 10% of $72 is $7.20. You must pay $7.20 in damages.

In all, you will pay:

• the use of the material for one month $ 8.00;
  
• compensation for damages $ 7.20

for a total of $15.20.

Take note:

If you cancel a contract for material, you must return the material to the merchant in the same state it was received.

If you have not received the rented material, you will not have to pay anything.

Are universities, CÉGEPs, and other public institutions bound by these rules?

No, they are not bound by these provisions.

Here are a list of persons and institutions that are excluded from the provisions relating to contracts of service involving sequential performance:

• school boards and schools;
  
• general and vocational colleges (CEGEPs);
  
• universities;
  
• private schools;
  
• municipalities;
  
• members of a professional order (for example, courses given by psychologists).

In short, the Consumer Protection Act applies only to private businesses offering courses and not to the institutions mentioned above. Bear in mind, however, that you are always free to negotiate with the person in charge if you are dissatisfied with a service at any institution.

Useful Links :

1. Office de la protection du consommateur website  [http://www.opc.gouv.qc.ca]