What Counts as a Direct Agreement
The Consumer Protection Act, 2002 defines a direct agreement as a consumer agreement negotiated or concluded in person at a location other than the supplier's place of business. Door-to-door sales are the classic example, but the definition extends to sales concluded at a trade show, at the consumer's workplace, or at any off-site location.
The direct agreement framework applies to most consumer contracts over $50 where the supplier solicits the consumer at a location that is not a fixed retail store.
The 10-Day Cooling-Off Period
Under sections 42 to 44 of the Consumer Protection Act, 2002, a consumer may cancel a direct agreement within 10 days of receiving the written copy of the contract, without reason and without penalty. The 10-day clock runs from the day the consumer receives a compliant copy of the contract, not the day of the sales visit.
Where the contract fails to meet the disclosure requirements, the cancellation period extends: a consumer may cancel within one year where required disclosures are missing. This is a powerful remedy against unscrupulous door-to-door operators who provide incomplete paperwork.
Real Example: HVAC Solicitation
A sales representative arrives at a home and pressures the homeowner into signing a rent-to-own contract for a furnace. The contract does not disclose the total cost or the cancellation rights. The homeowner is given a carbon copy at the end of the visit.
The homeowner may cancel within 10 days of receiving a compliant written copy of the agreement. Because the contract fails to disclose required information (total cost, cancellation rights), the cancellation window is extended: the homeowner may cancel within one year under CPA s. 43. Upon cancellation, the supplier is required to refund any payments within 15 days, remove any equipment installed, and discharge any security interest registered against the home.
How to Cancel a Direct Agreement
Cancellation may be made by any method that provides reasonable notice: in writing, by email, by fax, or in person. Written notice is preferable because it creates a record. The notice should identify the contract, state that the consumer is cancelling under the Consumer Protection Act, 2002, and be sent to the address shown in the contract.
After cancellation, the supplier is required to return any payments received within 15 days. The consumer is required to return any goods received in substantially the same condition as delivered. Where equipment has been installed, the supplier is typically required to remove it at the supplier's expense.
- Send written notice of cancellation to the supplier
- Keep a copy of the notice and proof of delivery
- Do not pay any further amounts after notice is sent
- If a security interest was registered, request written confirmation of discharge