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Canadian Consumer Warranty Laws

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C.C.S.M. c. C200

The Consumer Protection Act

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

PART I

INTERPRETATION AND APPLICATION

Definitions

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 »)

"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 Brokers Act who is acting in the capacity of a registrant under that Act, 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 prospectivecredit 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 office, 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 »)

"office" means the Consumer Protection Office continued under section 70; (« Office »)

"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; and

(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, as amended by S.M. 2008, c. 42, s. 11; S.M. 2006, c. 31, s. 2; S.M. 2009, c. 16, s. 23; S.M. 2011, c. 35, s. 8.

2           Repealed.

S.M. 1989-90, c. 53, s. 6; S.M. 2005, c. 16, s. 4.

Application of Act

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

Value received by borrower

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.

Limitation re value received

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.

Value given by borrower

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.

S.M. 2005, c. 16, s. 6.

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.

S.M. 2005, c. 16, s. 6.

Form of disclosure statement

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.

S.M. 2005, c. 16, s. 6.

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.

S.M. 2005, c. 16, s. 6.

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.

S.M. 2005, c. 16, s. 6.

Application of section

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.

S.M. 2005, c. 16, s. 6.

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).

Determining number of days

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.

S.M. 2005, c. 16, s. 6.

Disclosure in advertising to be prominent

13(1)       Information required by this Part to be disclosed in an advertisement must be disclosed prominently.

Prominence of APR disclosure

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.

Grace period conditions

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.

Failure to disclose

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.

S.M. 2005, c. 16, s. 6.

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.

S.M. 2005, c. 16, s. 6.

Right to accounting

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.

S.M. 2005, c. 16, s. 6.

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.

S.M. 2005, c. 16, s. 6.

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.

Surrender of security

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.

S.M. 2005, c. 16, s. 6.

Partial prepayment

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.

S.M. 2005, c. 16, s. 6.

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).

S.M. 2005, c. 16, s. 6.

BROKERS

No advance payment to 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.

Return of advance payment

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.

S.M. 2005, c. 16, s. 6.

Disclosure by 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.

Disclosure of brokerage fee

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.

Failure to disclose

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.

Refund of brokerage fee

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.

S.M. 2005, c. 16, s. 6.

Application

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.

S.M. 2005, c. 16, s. 6.

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.

S.M. 2005, c. 16, s. 6.

Application

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.

S.M. 2005, c. 16, s. 6.

INSURANCE

Choice of insurer

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.

S.M. 2005, c. 16, s. 6.

Proof of insurance

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.

S.M. 2005, c. 16, s. 6.

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.

S.M. 2005, c. 16, s. 6.

Liability and refund

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.

Regulations re refund

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.

S.M. 2005, c. 16, s. 6.

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 authoriz

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