When Can Consumers Cancel a Contract for Misleading Sales Statements in Ontario?

Key Points

• A seller cannot use false, misleading, or deceptive statements to convince a consumer to buy.

• Misleading statements can be made in person, online, in ads, by text, by email, or during a sales call.

• A consumer may be able to cancel the contract if the agreement was made after or while the seller engaged in an unfair practice.

• The notice to cancel should usually be given within one year after entering into the agreement.

• A “no refund” clause does not automatically defeat consumer rights under the Consumer Protection Act, 2002.

• Consumers should keep the contract, ads, messages, receipts, screenshots, and all payment records.

• The result depends on the facts, the type of transaction, and the evidence.

  
  

What Is an Unfair Practice?

In Ontario, the Consumer Protection Act, 2002 protects consumers from unfair practices in consumer transactions. Section 14 says it is an unfair practice to make a false, misleading, or deceptive representation. Section 17 also says that no person shall engage in an unfair practice.

This can include statements about the quality, use, benefits, performance, condition, or purpose of goods or services. It can also include misleading advertising. The key issue is whether the seller gave the consumer a false or misleading impression before or during the sale.

For example, a seller may say that a product is suitable for a specific purpose when it is not. A business may advertise that a service includes certain features, but the written contract provides something much less. A salesperson may also pressure a consumer into signing by making statements that are not accurate.

Can the Consumer Cancel the Contract?

Yes, in some cases. Section 18 of the Consumer Protection Act, 2002 says that an agreement entered into by a consumer after or while a person has engaged in an unfair practice may be rescinded by the consumer. The consumer may also be entitled to other remedies available at law, including damages.

Rescission means cancelling the agreement and trying to put the parties back in the position they were in before the contract. In simple terms, the consumer may ask for the contract to be undone and for money paid to be returned.

This is important because a business cannot simply rely on a contract clause that says “no refund” if the contract was obtained through misleading statements. Consumer protection rights apply despite many contractual terms that try to limit them.

The One-Year Notice Requirement

A consumer who wants to rescind the agreement because of an unfair practice must give notice within one year after entering into the agreement. The notice must indicate that the consumer wants to rescind the agreement, or seek recovery if rescission is not possible. It should also explain the reasons for doing so.

The notice does not need to use complicated legal wording. However, it should be clear. The consumer should identify the contract, the misleading statement, the date of purchase, the amount paid, and the remedy requested.

For example, a consumer may write that they are cancelling the agreement because the salesperson represented that the product could be used for a specific purpose, but that statement was false or misleading.

Examples of Misleading Sales Practices

A dealership tells a buyer that a trailer can legally be used as permanent living accommodation in Toronto, when that use is not permitted under applicable rules. If the buyer relied on that statement when making the purchase, this may raise an unfair practice issue.

A renovation company advertises that it is licensed, insured, and experienced in a specific type of work, but later the consumer finds out that the statement was false. This may support a claim that the consumer was misled.

A training program advertises guaranteed employment after completion, but the contract and actual service do not support that promise. The consumer may have a claim if the advertisement created a misleading impression.

A seller says that a product is new, custom-built, or suitable for a specific use, when the product does not match that description. This may also raise a consumer protection issue.

What if Rescission Is Not Possible?

Sometimes a contract cannot practically be undone. The goods may have been used, transferred, damaged, or changed. Section 18 also addresses situations where rescission is not possible and allows the consumer to seek recovery in appropriate circumstances. The Act also allows a court to award exemplary or punitive damages in addition to other remedies in an action under section 18.

This means the consumer’s remedy is not always limited to a simple refund. Depending on the facts, the consumer may seek damages for loss caused by the unfair practice.

What Evidence Should Consumers Keep?

Consumers should keep a full record of what happened. This includes the written contract, invoice, receipt, payment record, advertisement, website screenshot, text messages, emails, social media posts, brochures, and notes of what was said during the sales discussion.

This evidence matters because unfair practice claims often depend on what was represented before the contract was signed. A written contract may not tell the whole story. Section 18 also allows oral evidence about an unfair practice even where there is a written agreement.

What Should the Consumer Do First?

The consumer should act quickly. First, gather the documents and evidence. Second, write down a timeline of what was said, when the agreement was signed, when payment was made, and when the problem was discovered.

Third, send a written notice to the seller if rescission is being requested. The notice should be clear and should be saved. Email is often useful because it creates a record, but the proper delivery method may depend on the contract and the facts.

If the seller refuses to respond or refuses to refund, the consumer may need to consider a legal claim.

Contact Clarity Legal Services

If you believe a seller used misleading statements, false advertising, or pressure tactics to get you to sign a contract, contact Clarity Legal Services for an inquiry. We can review the agreement, the sales communications, and the evidence to help you understand your options under Ontario consumer protection law. EMAIL: ezhang@claritylegal.ca

Disclaimer: This blog is for general information only and does not constitute legal advice. Consumer protection claims depend on the specific contract, facts, evidence, and applicable law.