In July, holders of a rewards program loyalty card filed a class action alleging that the program sponsor had illegally modified the value of the points he had accumulated as of June 30, 2010. Should the Superior Court grant the motion, the terms and conditions of loyalty cards will be subject to a class action for the first time in Quebec. In a vast sea of rewards programs, where the industry makes every effort to gain consumer loyalty, what is the legal framework of reward programs in Quebec?
An informed consumer should, above all, know rewards programs are subject to the civil law legislation of the Quebec Civil Code. During the Civil Code Reform in 1991, the legislator, to protect the economic interests of consumers and ensure public protection, enacted a number of regulations with regards to adhesion and consumer contracts with the intention of remedying injustices generated by the inequality of bargaining power that favours the merchant and the industry.
An adhesion contract is characterized by the three following elements: i) there is no meaningful negotiation by the member in regards to the essential elements of the contract; ii) the ability to negotiate must relate to provisions essential to the contract, and iii) the provisions essential to the contract must be imposed or written by one of the parties according to said party’s instructions. In short, adhesion contracts will result in unfair liability on the consumer and benefit only to those who impose the terms and conditions.
On another note, consumer contracts distinguish themselves from the other types of contracts because of, among other things, the possibility of a considerable imbalance of strength between the parties.
Consequently, determining the type of contract entered into between the parties is especially important. Indeed, the characterization of an adhesion or a consumer contract means the implementation of a protection scheme, thus making it possible to alleviate certain legal provisions. As a result, the consumer will, in particular, profit from more favourable provisions with regards to the interpretation of the contract, will in some circumstances obtain the nullity of the external clauses that the consumer would not have been informed of at the time the contract was signed, the illegible and incomprehensible clauses could be deemed null and void in the event of prejudice to the consumer and, most important, a court could deem some of the clauses of the rewards program as abusive. A clause will be considered abusive when it disadvantages the consumer or member in an excessive and unreasonable way, thus going against the presumed good faith between the parties.
In addition to the specific provisions moderating the inequity of the forces induced by the use of consumer and adhesion contracts, legislative provisions of general application governing contracts will apply such as the requirement that the parties must “conduct themselves in good faith both at the time the obligation is created and at the time it is performed or extinguished” and that “no right may be exercised with the intent of injuring another or in an excessive and unreasonable manner which is contrary to the requirements of good faith.”
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