|
OR
[2] Subjective lesion - the obligation of the consumer is excessive, harsh, unconscionable.
-
(Compare this to 1406 which requires both disproportion of prestations AND exploitation of one party by another).
-
Reminiscent of art 1406 and incapable majors and minors by effectively giving consumers the tool of subjective lesion.
CVL - Gareau Auto c. B.C. Impériale de Commerce
-
Extensive interpretation of Art. 8. of CPA
-
“Old and still respectable principles of freedom of contract, based on the autonomy of the will” versus “justice contractuelle”
-
Art. 8: two types of lesion
-
Disproportion – “objective lesion”
-
Excessive/abusive/exorbitant – “subjective lesion” (different from the 1040c CCBC)
-
Burden of proof on the merchant (presumption of exploitation)
-
This is where Art. 9 CPA comes into play!
-
Hence Art. 9 CPA, three elements
-
What does this mean for the merchant?
-
The merchant has to make sure that the consumer is in a position to enter into the contract without lesion
-
How does the nullity of the contract between Gareau and Carbonneau affect the relationship between Carbonneau and the bank?
-
Consumer Protection Act – Rights of assignee of debt.
Art 103. The assignee of a debt owed to a merchant under a contract to which the latter is a party cannot have more rights than the merchant and is solidarily responsible with the merchant for the performance of the merchant’s obligations up to the amount of such debt at the time it is assigned to him or, if he assigns it in turn, up to the amount of payment he has received.
CVL – Gareau Auto v. B.C. Impériale de Commerce, [1989] RJC 1091 (CA), CB2 : 61 |
Jurisdiction
|
Quebec
|
Facts
|
Lawsuit following the nullification of a consumer contract. Gareau Auto Inc. sold a boat (which it had acquired from an uninvolved third party) to Guy Carbonneau for about $11 174, payable on a cash advance and 30 monthly installments. The seller assigned its claim against the buyer to CIBC (see 1637 CCQ). Carbonneau decided he didn’t want the boat anymore, regretting his decision almost immediately and only having used the boat once.
The bank sued Gareau for the amount paid for the bad debt, and Gareau sued Carbonneau for the amount of the boat. The trial judge ruled against Gareau on both counts Carbonneau lawsuit didn’t go through due to Art. 8 and 9 of the Loi sur la protection du consommateaur, and Gareau was found responsible for the bad debt to the bank as a result. Gareau appealed.
|
Issues
|
Was the contract of sale of the boat null for lesion, thus making the debt sold to CIBC a bad debt?
|
Holding
|
Yes (3-0) CIBC.
|
Reasoning
|
Chevalier J:
-
Appellant argued that ss. 8 and 9 should be interpreted restrictively because art. 1040c has been interpreted restrictively rejected because the old concepts of contractual freedom founded on the autonomy of the will are not enough to satisfy the equally imperative notion of contractual justice.
-
S. 8 has two forms of lesion:
-
[1] Disproportion of prestations: when determining this, court should ask if (1) there is a disproportion, and; (2) if the disproportion is considerable. In this case, there was no disproportion because the boat was sold at a fair commercial price.
-
[2] Obligations for consumer excessive or abusive or exorbitant: Judge interprets this as subjective lesion (based on the wording of s. 9). This depends on the means of each consumer – burden of proof is on the consumer that it will be disastrous for their patrimony. Do not have to show that the obligation is objectively exorbitant or excessive – consumer can be relieved of the obligation even if the price is fair.
-
S. 9 – in order to establish [2] of s. 8, three elements must be considered:
-
[1] Condition of the parties: economic situation of the individual consumer – is the obligation excessive?
-
[2] Circumstances in which the contract was concluded: circumstances surrounding the negotiation and conclusion of the contract, not the personal circumstances of the consumer (marital difficulties, etc.) – matter of evidence.
-
[3] The advantages of the contract for the consumer: A court might consider the purchase of something the consumer actually needs as acceptable, even if the obligation assumed is quite excessive. However, if the object is totally unneeded/not useful, the court may annul the contract, even if the obligations are only relatively onerous.
-
In this case, Carbonneau was on worker’s compensation, married with 3 children, with a mortgage and not much equity. The boat is of no use to him because he doesn’t have a chalet and does not participate in water sports. He obviously cannot afford the boat – he had to get his brother to lend him $500 for the deposit. The contract will have detrimental consequences for him and should be annulled.
-
Gareau has to pay back CIBC because it was his responsibility to ensure that the sale would be fair.
|
Ratio
|
S. 8 of the CPA includes both objective and subjective lesion. Objective lesion is an inquiry into the price paid and whether it was fair. Subjective lesion is an inquiry into the individual consumer’s circumstances and the effect of the obligations upon the consumer, weighed against the benefit gained from the contract.
|
Lesion Through Art. 1437 (Contracts of Adhesion)
Art. 1437 alludes to lesion (Jonathan Nuss) also protection for contracts of adhesion (not just for consumer contracts – Slush Puppie)
Article 1437
An abusive clause in a consumer contract or contract of adhesion is null, or the obligation arising from it may be reduced.
An abusive clause is a clause which is excessively and unreasonably detrimental to the consumer or the adhering party and is therefore not in good faith; in particular, a clause which so departs from the fundamental obligations arising from the rules normally governing the contract that it changes the nature of the contract is an abusive clause.
|
CVL Slush Puppie
Not a consumer situation, but still a contract of adhesion: Art. 1437 CCQ
Exclusive delivery – close relationship, dependency – good faith
No possibility to contest the test results: “act of faith”
Note Art. 1623 CCQ: Penalty Clause
Article 1623
A creditor who avails himself of a penal clause is entitled to the amount of the stipulated penalty without having to prove the injury he has suffered.
However, the amount of the stipulated penalty may be reduced if the creditor has benefited from partial performance of the obligation or if the clause is abusive.
|
Share with your friends: |
