1990 BILL 275 Second Session, 22nd Legislature, 39 Elizabeth II THE LEGISLATIVE ASSEMBLY OF ALBERTA BILL 275 UNFAIR CONTRACT TERMS ACT MR. WRIGHT First Reading Second Reading Committee of the Whole Third Reading Royal Assent

Bill 275 Mr. Wright

Definitions and appUcation of Act BILL 275 1990 UNFAIR CONTRACT TERMS ACT (Assented to , 1990) HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Alberta, enacts as foUows: 1(1) In this Act, (a) "business" includes a profession and the activities of any government department or local or pubUc authority; (b) "goods" has the same meaning as in the Sale of Goods Act; (c) "negUgence" means the breach (

i) of any obligation, arising from the express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the contract, (ii) of any common law duty to take reasonable care or exercise reasonable skiU, but not any stricter duty, (Ui) of the common duty of care unposed by the Occupiers' Liability Act; (d) "notice" kicludes an announcement, whether or not in writing, and any other communication or purported communication; (e) "personal injury" includes any disease and any knpairment of physical or mental condition.

(f) "reasonableness" m

section 6(3), 7(3) and (4) shall be determined with particular regard to the matters Usted in the Schedule.

(2) Subject to

section 6(4), sections 2 to 7 apply only to business UabiUty, that is UabiUty for breach of obUgations or duties arising (

a) from things done or to be done by a person m the course of a buskiess, whether his own business or another's; or (

b) from the occupation of premises used for the business purposes of the occupier.

(3) In relation to any breach of duty or obUgation, it is immaterial for any purpose of this Act whether the breach was inadvertent or intentional, or whether UabiUty for it arises directly or vicariously.

(4) Sections 2 to 4 do not extend to (

a) any contract of insurance, including a contract to pay an annuity on human life; (

b) any contract so far as it relates to the creation or transfer of an interest in land, or to the termination of such an interest whether by extinction, merger, surrender, forfeUure or otherwise; (

c) any contract so far as it relates (

i) to the information or dissolution of a company, which means any body corporate or unincorporated association and includes a partnership, or (

U) to its constitution or the rights or obUgations of its corporators or members; (

d) any contract so far as it relates to the creation or transfer of securities or of any right or interest in securities.

(5) Section 2(1) and (2) does not extend to a contract of employment, except ki favour of the employee. Negligence liability 2(1) A pcrsou cauuot by reference to any contract term or to a notice given to persons generaUy or to particular persons exclude or restrict his liabUity for death or personal kijury resultmg from negUgence.

(2) In the case of other loss or damage, a person cannot so exclude or restrict his UabiUty for negUgence except insofar as the term or notice satisfies the requkement of reasonableness.

(3) Where a contract term or notice purports to exclude or restrict UabiUty for negUgence a person's agreement to or awareness of it is not of itself to be tJiken as indicating his voluntary acceptzmce of any risk. Liability arising in contract 3(1) This

section appUes as between contracting parties where one of them deals as consumer or on the other's written standard terms of business.

(2) As agzunst one party, the other cannot by reference to any contract term (

a) when himself in breach of contract, exclude or restrict any UabiUty of his in respect of the breach; or (

b) claim to be entitled (

i) to render a contractual performance substantiaUy dUferent from that which was reasonably expected of him, or (

U) in respect of the whole or any part of his contractual obUgation, to render no performance at aU, except msofar as the contract terms satisfied the requkement of reasonableness. Unreasonable indemnity clauses Guarantee of wnsumer goods 4(1) A person dealing as consumer cannot by reference to any contract term be made to mdemnify another person, whether a party to the contract or not, m respect of UabUity that may be mcurred by the other for negligence or breach of contract, except msofar as the contract term satisfies the requirement of reasonableness.

(2) This

section appUes whether the UabiUty m question (

a) is dkectiy that of the person to be mdemnified or is incurred by him vicariously; (

b) is to the person deaUng as consumer or to someone else. 5(1) In the case of goods of a type ordinarUy suppUed for private use or consumption, where loss or damage

(

a) arises from the goods proving defective whUe m consumer use; and (

b) results from the negligence of a person concerned in the manufacture or distribution of the goods, UabUity for the loss or damage cannot be excluded or restricted by reference to any contract term or notice contained in or operating by reference to a guarantee of the goods.

(2) For the purposes of this

section (

a) goods are regarded for private use or consumption when a person is using them, or has them in his possession for use, otherwise than exclusively for the purposes of a business; and (

b) anything in writing is a guarantee if it contains or purports to contain some promise or assurance, however worded or presented, that defects wiU be made good by complete or partial replacement, or by repak, monetary compensation or otherwise. Sale and conditional sales Miscellaneous contracts under which goods pass

(3) This

section does not apply to parties to a contract under or in pursuance of which possession or ownership of the goods passes. 6(1) LiabiUty for breach of the obUgations arising from

section 15(

a) of the Sale of Goods Act caimot be excluded or restricted by reference to any contract term.

(2) As against a person dealing as consumer, UabiUty for breach of the obligations arising from

section 16, 17 or 18 of the Sale of Goods Act cannot be excluded or restricted by reference to any contract term.

(3) As against a person dealing otherwise than as consumer, the UabiUty specified m subsection (2) cannot be excluded or restricted by reference to a contract term, but only msofar as the term satisfies the requkement of reasonableness.

(4) The UabUities referred to m this

section are not only the business UabiUties defined m

section 1(2), but mclude those arising under any contract of sale of goods or condUional sales agreement. 7(1) Where the possession or ownership of goods passes under or m pursuance of a contract not governed by the law of sale of goods or condUional sales, subsections (2) or (4) apply as regards the effect to be given to a contract terms excludmg or restricting

UabUity for breach of obUgation arismg by impUcation of law from the nature of the contract.

(2) As agamst a person dealing as consumer, UabUity in respect of the goods' correspondence with description or sample, or their quaUty or fitness for any particular purpose, cannot be excluded or restricted by reference to any such term.

(3) As against a person deaUng otherwise than as consumer, that UabiUty can be excluded or restricted by reference to such a term, but only insofzu- as the term satisfies the requkement of reasonableness.

(4) LiabiUty in respect of (

a) the right to transfer ownership of the goods, or give possession; or (

b) the assurance of quiet possession to a person taking goods in pursuance of the contract, cannot be excluded or restricted by reference to any such term except insofar as the term satisfies the requirement of reasonableness. Misrepresentation g jf ^^ coutract coutaius a tcrm which would exclude or restrict (

a) any UabiUty to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or (

b) any remedy available to another party to the contract by reason of such misrepresentation, that term shaU be of no effect except insofar as it satisfies the requkement of reasonableness for the party claiming that the term satisfies that requkement to show that k does. Effect of breach 9(1) Where for reUance upon k a contract term has to satisfy the requkement of reasonableness, k may be found to do so and be given effect accordingly notwithstanding that the contract has been terminated either by breach or by a party electkig to treat it as repudiated.

(2) Where on a breach the contract is nevertheless affirmed by a party entitled to treat it as repudiated, this does not of itseU exclude the requkement of reasonableness in relation to any contract term.

Evasion by secondary contract Reasonableness test 10 A person is not bound by any contract term prejudicing or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another's UabiUty which this Act prevents that other from excluding or restrictmg. 11(1) In relation to a contract term, the requkement of reasonableness for the purposes of this Act is that the term shall have been a fak and reasonable one to be included having regard to the ckcumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.

(2) In determining for the purposes of

section 6 or 7 whether a contract term satisfies the requkement of reasonableness, regard shaU be had in particular to the matters specified in the

Schedule to this Act, but this subsection does not prevent a court or £U"bitrator from holding, in accordance with any rule of law, that a term purports to exclude or restrict any relevant UabiUty is not a term of the contract.

(3) In relation to a notice, not being a notice having contractual effect, the requkement of reasonableness under this Act is that it should be fak and reasonable to aUow reUance on k, having regard to aU the ckcumstances obtaining when the UabiUty arose or, but for the notice, would have arisen.

(4) Where by reference to a contract term or notice a person seeks to restrict to a specified sum of money, and the question arises, under this or any other Act, whether the term or notice satisfies the requirement of reasonableness, regard shaU be had in particular, but without prejudice to subsection (2) in the case of contract terms, to Dealing as consumer (

a) the resources which he could expect to be avaUable to him for the purpose of meeting the UabiUty should k arise; and (

b) how far k was open to him to cover himself by msurance.

(5) It is for those claiming that a contract term or notice satisfies the requkement of reasonableness to show that k does. 12(1) A party to a contract deals as consumer in relation to another party if (

a) he neither makes the contract in the course of a busmess nor holds hknself out as doing so; and

Commencement (

b) the other party does make the contract m the course of a business; and (

c) m the case of a contract governed by the law of sale of goods or conditional sale, or by

section 7, the goods passing under or in pursuance of the contract are of a type ordmarily suppUed for private use or consumption.

(2) On a sale by auction or by competkive tender the buyer is not in any ckcumstances to be regarded as dealing as consumer.

(3) Subject to this section, it is for those claiming that a pcu-ty does not deal as consumer, to show that he does not. To the extent that this Act prevents the exclusion or )f anv UabUitv it also nrevents Varieties of i^M^i JQ thg extcnt that this Act pre exemption clause v-;. ,.,.,.., ^ restriction of any habihty it also prevents (

a) making the liabUity or its enforcement subject to restrictive or onerous conditions; (

b) excluding or restricting any right or remedy m respect of the UabiUty, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy; (

c) excluding or restricting rules of evidence or procedure, and, to that extent, sections 2 and 5 to 7 also prevent excluding or restricting UabiUty by reference to terms and notices which exclude or restrict the relevant obUgation or duty.

(2) An agreement in writing to submit present or future differences to arbitration is not to be treated under this Act as excluding or restricting any UabiUty. 14(1) This Act comes mto force on Proclamation.

(2) Nothing ki this Act appUes to contracts made before the date on which k comes into force, but subject to this, k appUes to UabUity for any loss or damage which is suffered on or after that date.

SCHEDULE GUIDELINES FOR APPLICATION OF REASONABLENESS TEST The matters to which regard is to be had in particular for the purposes of sections 6(3), 7(3) and (4) are any of the foUowing which appear to be relevant: (

a) the strength of the bargaining positions of the parties relative to each other, taking into account, among other thmgs, alternative means by which the customer's requkements could have been met; (

b) whether the customer received an inducement to agree to the term, or in accepting it had cm opportunity of entering mto a simUar contract with other persons, but without having to accept a simUar term; (

c) whether the customer knew or ought reasonably to have known of the existence and extent of the term, having regard, among other things, to any custom of the trade and any previous course of deeding between the parties; (

d) where the term excludes or restricts any relevant Uability if some condkion is not compUed with, whether k was reasonable at the time of the contract to expect that compliance with that condition would be practicable; (

e) whether the goods were manufactured, processed or adapted to the special order of the customer. Title: 1990 (22nd 2nd) Bill 275, Unfair Contract Terms Act