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Do Store Policies Form a Contract that Binds Customers?

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  • Feb 26th, 2011 11:53 pm
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Do Store Policies Form a Contract that Binds Customers?

This forum seems to have a high level of collective wisdom, so I'm hoping you can help me out.

I'm in an on-line discussion with someone who's claiming that a store's policies and manufacturers' warranties form a legally binding contract, and the purchaser must abide by those terms, like it or not.

I have quoted the applicable sections of the Sale of Goods Act, and the Consumer Protection Act (which say that consumers have rights that can't be taken away from them, regardless of any policies or express warranties).

However, I was hoping there was something in contract law that deals a death-blow to the idea that a store policy can be considered a contract that binds the customer.

Clearly there is 'consideration', when the customer hands over money. But is there 'offer and acceptance', if it's just a 'take-it-or-leave-it' policy of the store?

If it's legally binding on the customer, couldn't we all start suing stores that refuse to take a return of an unopened item within the stated time period?

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In terms of the warranty, that warranty is with the manufacturer and you can bet that there is liability on their books. So, I would say, 'yes', it is a form of contract.

However, they write the terms and conditions very specifically to protect against frivolous claims outside a reasonable warranty claim.

In terms of store policies being contracts? Again, I think they're written in such a way that it would make it nearly impossible to have a court impose them on company. And really, if the courts forced a company to adere to their policies, the companies would simply eliminate the policies, keeping nothing in writing.

It's an informal agreement, in my mind, that as long as I keep to the terms, they will honour the policy with their word. If they fail to do so, I'm likely to not shop there again and take my business elsewhere.

I'm fine to let the government to write legislation to protect consumers but let the little details and policies be handled by the stores and their customers.
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DavidLeR wrote:
Feb 24th, 2011 11:24 am
I was hoping there was something in contract law that deals a death-blow to the idea that a store policy can be considered a contract that binds the customer.
There is: unconscionability.
a defense against the enforcement of a contract based on the presence of terms that are excessively unfair to one party... a court of law will consider evidence that one party to the contract took advantage of its superior bargaining power to insert provisions that make the agreement overwhelmingly favor the interests of that party... The substantive problem will usually be the consideration, but could also be the terms, interest payments, or other obligations the court finds unfair. Procedural issues that a court could consider include a party's lack of choice, superior bargaining position or knowledge, and other circumstances surrounding the bargaining process...
You'd need to file a lawsuit in order to raise that argument. That's not practical for smaller, every day consumer purchases whose value is under $500 to $1,000. Even small claims court requires paying fees to file the complaint plus all the time and effort to prepare, then appear in court. And even then, there's no assurance of winning.

If the issue is widespread, e.g. the policy of a large chain of stores, you might be able to get a legal firm to file a class-action suit on a contingency fee basis, i.e. they get paid only if the win. But otherwise ISTM that an unconscionability argument won't get you very far.
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DavidLeR wrote:
Feb 24th, 2011 11:24 am
.......I'm in an on-line discussion with someone who's claiming that a store's policies and manufacturers' warranties form a legally binding contract, and the purchaser must abide by those terms, like it or not.....

If the store policy or manufacturer's warranty seems unfair or to the consumers' disadvantage, it is best to avoid potential headaches and simply take your business elsewhere. Even if the provincial/federal law is on your side, a policy designed to work against you is a sure sign the company in question does not intend to stand behind their merchandise.
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bylo wrote:
Feb 24th, 2011 11:54 am
There is: unconscionability.
You'd need to file a lawsuit in order to raise that argument. That's not practical for smaller, every day consumer purchases whose value is under $500 to $1,000. Even small claims court requires paying fees to file the complaint plus all the time and effort to prepare, then appear in court. And even then, there's no assurance of winning.

If the issue is widespread, e.g. the policy of a large chain of stores, you might be able to get a legal firm to file a class-action suit on a contingency fee basis, i.e. they get paid only if the win. But otherwise ISTM that an unconscionability argument won't get you very far.

Yes we know! You read unconscionable and now it's your answer to everything. What you always fail to mention is "Usually for a court to find a contract unconscionable the party claiming unconscionability will have to prove both that there was a problem with the substance of the contract and the process through which that contract was formed". Walking into a store and willfully entering into a contract will not make it unconscionable no matter what you think after the fact. Being stuck on the side of a road and having someone tell you that they will pull you out for $10,000 or you can stay and freeze to death would make it unconscionable. In one case you have an option of not entering the contract and the other case you don't. Having the option makes it conscionable, not having the option makes it unconscionable.
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spf1971 wrote:
Feb 24th, 2011 12:31 pm
Yes we know!
Great! It's good to know that someone's paying attention ;)
What you always fail to mention is "Usually for a court to find a contract unconscionable the party claiming unconscionability will have to prove both that there was a problem with the substance of the contract and the process through which that contract was formed". Walking into a store and willfully entering into a contract will not make it unconscionable no matter what you think after the fact.
Signing a cellphone contract or a car rental contract that's several pages of legalistic fine print that you can't understand and that you're under pressure to read/approve while there are several other people behind you is unconscionable under the criteria you quoted. So is being refused a refund for a new item that is found to unfit for its stated use even though the merchant placed an "as-is, no refunds" sign at the cash register.
In one case you have an option of not entering the contract and the other case you don't. Having the option makes it conscionable, not having the option makes it unconscionable.
Check the case law in the Wikipedia entry. The people who entered into contracts that courts later ruled to be unconscionable all had the option to walk away, but didn't. But then I suppose you want us to believe that you're more knowledgeable than learned judges throughout the Commonwealth and the US.
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Thanks for the ideas.

The discussions on "unconsionable" contracts are interesting. I'm sure there are other ways to get around an invalid contract, such as violations of consumer protection laws.

However, I'm more interested in whether policies even count as a contract in the first place.

Many sources describe consumer laws, and how stores offer policies "voluntarily" to attract and keep customers. I have not found any sources that directly say, "the policy is part of the sales contract". However, I haven't found anything that says "the policy is not part of any contract", either.

Actually, if the policies were contractual obligations, this could be good for customers, since they could sue the store (or at least threated to do so) for the store's failure to abide by it, such as not allowing a return of an item within the period stated in the store's policy. I'm pretty sure it doesn't work that way.

One thing I did come up with is "offer and acceptance". If the policy is only written on the receipt, and the receipt isn't printed until the sale has occurred, then the buyer could not have known the policy in advance, and therefore there was no 'offer and acceptance' of those terms.

But, that won't work if the policy is available elsewhere, would it?

Any other ideas?

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DavidLeR wrote:
Feb 24th, 2011 11:24 am
This forum seems to have a high level of collective wisdom, so I'm hoping you can help me out.

I'm in an on-line discussion with someone who's claiming that a store's policies and manufacturers' warranties form a legally binding contract, and the purchaser must abide by those terms, like it or not.
I wouldn't say so much that the policies and warranties are contracts. Certainly, online retailers who have their conditions of sale which, assuming the buyer typically clicks on a button which indicates an agreement with those conditions of sale, can form a contract regarding the handling of specific transaction or order. When it comes to other policies and warranties forming a contract, I would have to say that they do not, although they can limit the obligations of one party in certain circumstances.

Ultimately though, those terms and conditions can not be unfairly beneficial toward one party, and they cannot attempt to remove rights of one party which have been legislated.
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DavidLeR wrote:
Feb 25th, 2011 9:09 am
However, I'm more interested in whether policies even count as a contract in the first place.
A related issue: Often the back of the cash register receipt has the seller's sales/refund/warranty policies printed on it. You don't get to see that wording until after you've paid. In some cases the boilerplate is so long, possibly repeated in both official languages, etc. that your receipt may be too short to show it all. Have you implicitly agreed to these policies by virtue of completing the sale even if you didn't know they existed prior to payment and may not, even after payment, have a complete copy of them?
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[QUOTE]A related issue: Often the back of the cash register receipt has the seller's sales/refund/warranty policies printed on it. You don't get to see that wording until after you've paid. In some cases the boilerplate is so long, possibly repeated in both official languages, etc. that your receipt may be too short to show it all. Have you implicitly agreed to these policies by virtue of completing the sale even if you didn't know they existed prior to payment and may not, even after payment, have a complete copy of them? [/QUOTE]

I think it would depend on how easily the retailer makes those terms available to you prior to purchase. You can't necessarily claim ignorance and have the contract voided, especially if the terms were accessible prior to purchase. You'll also find on the ministry of consumer services website that they tell consumers to find out the return policies prior to making the purchase. The burden is on the customer to find out the policies (at least regarding to refunds/exchanges/warranties) before the purchase.

The burden is on the customer to find out what the policies are before purchase, and as such you do implicitly agree to them at purchase BUT if the retailer makes them difficult or impossible to find and/or they're illegal/unfair you would have case otherwise.


As for the OP, there was a section in the CPA (or sales of goods act) regarding misrepresentation. You could technically argue that if a retailer isn't following their advertised policies and you bought a product because of said policies, then this is a misrepresentation of their products and as such you could have the transaction voided and reversed (refunded) as well as collect damages (if any). I can't be sure if misrepresentation extends to policies but the wording of the section seems to be vague enough that you could make the argument for it.
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iamnotamerican.com wrote:
Feb 25th, 2011 9:49 am
When it comes to other policies and warranties forming a contract, I would have to say that they do not, although they can limit the obligations of one party in certain circumstances.
I think you are on to something. I did some more research. A promise to maybe do something is called "illusory", because it isn't really a promise at all. To be a valid contract term, it has to say what will be done (i.e., not what maybe will be done).

So, if a store says, "We reserve the right to refuse returns", then they aren't really promising to do anything, and this can't be a term in a contract.
iamnotamerican.com wrote:
Feb 25th, 2011 9:49 am
Ultimately though, those terms and conditions can not be unfairly beneficial toward one party, and they cannot attempt to remove rights of one party which have been legislated.

Agreed, the CPA has a lot of provisions for that. I recall that Mazda dealership that sold a disabled lady a car for something like twice its value, and they got into a lot of trouble.

Both the CPA and SGA say flat out that nothing can take away the rights granted to the consumer in those acts. Plus, a contract containing illegal terms (such as violating the CPA) is void.
Euroae wrote:
Feb 25th, 2011 1:56 pm
I think it would depend on how easily the retailer makes those terms available to you prior to purchase. You can't necessarily claim ignorance and have the contract voided, especially if the terms were accessible prior to purchase.
I've looked into this a bit, with 'offer and acceptance'. I don't think you can enter into a contract if you don't know what the terms are, and terms can't be added later.

For instance, if you are at the cash buying something, I don't think they can say, "the policy is over at Customer Service" or "the policy is on our web site", and have those terms be included in a contract.

I could be wrong, but I don't think it's enough that you could have found out what the contract terms are; I think you have to actually know what they are, and agree to them (acceptance).
Euroae wrote:
Feb 25th, 2011 1:56 pm
You'll also find on the ministry of consumer services website that they tell consumers to find out the return policies prior to making the purchase. The burden is on the customer to find out the policies (at least regarding to refunds/exchanges/warranties) before the purchase.
I agree that this is good advice, but I don't think the Ministry is going as far as saying it's part of a sales contract.

Actually, it may be the opposite - if it were a term of a contract, you'd be told about it, and not have to go looking.
Euroae wrote:
Feb 25th, 2011 1:56 pm
The burden is on the customer to find out what the policies are before purchase, and as such you do implicitly agree to them at purchase BUT if the retailer makes them difficult or impossible to find and/or they're illegal/unfair you would have case otherwise.
Since the 'default' rule is that all sales are final, no returns, no exchanges, etc., it's not safe for a consumer to assume that the store has a different policy in general, or for the specific item they are buying.

It seems clear that if the terms are completely hidden from you, they can't be part of a contract.
Euroae wrote:
Feb 25th, 2011 1:56 pm
As for the OP, there was a section in the CPA (or sales of goods act) regarding misrepresentation. You could technically argue that if a retailer isn't following their advertised policies and you bought a product because of said policies, then this is a misrepresentation of their products and as such you could have the transaction voided and reversed (refunded) as well as collect damages (if any). I can't be sure if misrepresentation extends to policies but the wording of the section seems to be vague enough that you could make the argument for it.
I like that idea a lot! I found this under Unfair Practices:

"13. A representation that the transaction involves or does not involve rights, remedies or obligations if the representation is false, misleading or deceptive."

So, a customer could try to return something, the store refuses, and the customer rescinds the sale on the basis of an Unfair Practice.

Still, that's applying the CPA, and not a term of a sales contract.

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DavidLeR wrote:
Feb 26th, 2011 8:23 am
I recall that Mazda dealership that sold a disabled lady a car for something like twice its value, and they got into a lot of trouble.
That situation was so, ahem, unconscionable, that Mazda terminated the dealership and gave the woman a free car. In addition, the salespeople at the dealership were charged with violating the ON CPA.

Mazda axes Orangeville dealer over breaches
Mazda Canada has terminated a dealership in Orangeville for breaching the company’s business practices including an incident where the store sold a car to a woman for more than $25,000 above its real value...

The Ontario Motor Vehicle Industry Council, which regulates new and used car dealers, charged Mazda of Orangeville and two senior sales employees recently with “engaging in unfair practice by making an [ahem] unconscionable representation,” contrary to the Consumer Protection Act.

The dealership faces a maximum fine of $250,000 and the two employees could receive $100,000 fines plus jail time of up two years if they are found guilty. They could also lose their provincial registrations to sell vehicles.
But these actions were also due in large part to all the media attention this transaction attracted. Had she paid twice as much as the going rate for say, a cellphone contract, rather than a $40+k car, I doubt there would have been any negative publicity, let alone charges against the seller. A loss of a few $100s isn't as newsworthy as a loss of a few $10,000s.

Update: It seems the prosecution of this case has encountered some legal pot holes: Auto watchdog to appeal ruling in case against former Mazda store trio
Ontario’s watchdog for auto dealers says it will appeal a court ruling that tossed out charges against three officials at a former store who allegedly engaged in “unconscionable conduct” by selling a car for about $25,000 more than its real value.

The Ontario Motor Vehicle Industry Council, which regulates new and used car dealers, confirmed Friday it will move to either overturn a judge’s decision this week or an earlier ruling by a justice of the peace that effectively stopped their prosecution of high profile charges against the three...

Justice Leonard Ricchetti ruled late Thursday that the agency had taken a wrong legal step to fix a mistake it made before Justice of the Peace Leon Foyolle in earlier proceedings on the charges.
It seems the problem was procedural rather than legal, however, this only underscores how difficult it can be for consumers to get redress even when it seems clear they were taken advantage of.
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[QUOTE]Still, that's applying the CPA, and not a term of a sales contract. [/QUOTE]

I think ultimately you could argue that the policies do form part of the terms of a sales contract. If you walk up to the manager and tell him/her that you don't agree with the policies, what do they tell you? something along the lines of go shop somewhere else. They're basically telling you that if you want to buy something here, you need to agree to our policies and if that doesn't constitute a term of a sale (contract) I don't know what does. Hell, in most cases it's even written on the receipt, so you have it in writing as well.

So as long as you follow their policy correctly and they end up going against their policy; I think you'd be able to argue breach of contract and have it reversed. Unless their policy ends with something like "at our discretion".

Ultimately, you may have to fight for it but if your in the right, the store will give in long before it gets too serious.
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DavidLeR wrote:
Feb 24th, 2011 11:24 am
This forum seems to have a high level of collective wisdom, so I'm hoping you can help me out.

I'm in an on-line discussion with someone who's claiming that a store's policies and manufacturers' warranties form a legally binding contract, and the purchaser must abide by those terms, like it or not.

I have quoted the applicable sections of the Sale of Goods Act, and the Consumer Protection Act (which say that consumers have rights that can't be taken away from them, regardless of any policies or express warranties).

However, I was hoping there was something in contract law that deals a death-blow to the idea that a store policy can be considered a contract that binds the customer.

Clearly there is 'consideration', when the customer hands over money. But is there 'offer and acceptance', if it's just a 'take-it-or-leave-it' policy of the store?

If it's legally binding on the customer, couldn't we all start suing stores that refuse to take a return of an unopened item within the stated time period?

a store policy or a mnf warranty cannot be any less then the law of the land (province) in which the goods are sold. - it they do not supercede common or statute law.
http://www.heatware.com/eval.php?id=14378

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rb wrote:
Feb 26th, 2011 3:43 pm
a store policy or a mnf warranty cannot be any less then the law of the land (province) in which the goods are sold. - it they do not supercede common or statute law.

Exactly. A store policy can be viewed as a contract as you have agreed to those terms when making the purchase but those policies can not be in violation of any law. If they are in violation of a law then in a worst case situation you would have to seek redress in court.

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