Rescission - a Remedy For Breach of Disclosure by Dealer
Rescission is available to any customer who is not a registered dealer.
Cancellation of the Contract
General Regulation 50 of the MVDA allows a customer to cancel a contract if the dealer and contract fail to disclose (or fail to disclose in a timely way):
- The previous use of the vehicle as a taxi or limo.
- The previous use of the vehicle as a police or emergency services vehicle.
- The previous use of the vehicle as a daily rental (unless the vehicle has subsequently been owned by someone other than a dealer).
- The make, model and model year of the vehicle.
- That the vehicle has been branded (irreparable, salvage or rebuilt), and how it was last classified.
- The actual distance the vehicle has travelled (when that cannot be determined, a dealer must then make the appropriate disclosure statement discussed in Chapters 4 and 5).
A customer may have additional remedies at law and may also pursue these remedies.
Important Cancellation Details
- Under the MVDA, a customer has up to 90 days from the date of delivery to rescind the contract. Consumers may have up to one year to request rescission (for misrepresentation) under the Consumer Protection Act, 2002.
- A customer may cancel the contract even if the dealer was unaware of a vehicle’s true history or honestly believed the disclosure given to be accurate, regardless of the steps taken by the dealer to ascertain or verify the information.
- When a sale or lease agreement is rescinded, it also cancels any other agreements under the contract such as those for warranties and financing.
- A dealer is not required to return a vehicle traded in under the contract, but the dealer must refund the amount paid for that vehicle, or the amount of the credit allowed for the trade-in on the contract.
- A margin of error is allowed to the dealer where he or she determines the total distance driven (s.42(3)), or when he or she cannot determine the total distance driven, but can determine the distance driven as of some past date (s.42(4)). The disclosure of distance made by the dealer is deemed to be accurate if it is within the LESSER of five per cent or 1,000 kilometres of the correct distance required to be disclosed (s.50(4)).
- The customer must take reasonable care of the vehicle from the time of receiving it until returning it to the dealer.
- Rescission is not available to a person who leases a vehicle from a dealer and who enters into a contract with the dealer during or after the term of the lease to purchase that vehicle.
- Rescission is not available under this regulation to another registered dealer who has purchased or leased a vehicle from the dealer.
- There are sophisticated vehicle history reports (such as CARFAX) available to all customers.
Customers have the legal right to cancel a contract should the dealer fail to make certain disclosures. In this circumstance, the customer has up to 90 days to rescind, even if the dealer was unaware of a vehicle’s true history and sold it in good faith. Should rescission occur, it also cancels any other agreements under the contract, such as those for warranties and financing.