The scourge of “no-shows” is certainly not a new problem that restaurateurs, among many others, have to face. However, it seems that the phenomenon is growing and merchants are fed up with this war with ghost customers.
Indeed, it is becoming more and more common to see a fee charged in the event of cancellation of a reservation for any service. Some will grant the possibility of cancelling up to 48 hours before the set date, while others are more rigid and do not grant any possibility of refund of deposit. This new practice means that the merchant charges fees directly to your credit card, without having exchanged the corresponding service for you.
This capsule will demystify the applicable law in terms of cancellation fees in shops, from the outing to the spa to the restaurant.
Legislative Sources
The purpose of the Consumer Protection Act (CPA) is to protect consumers from large companies who would like to adopt dishonest practices in order to increase sales or avoid a loss of profit. In the present situation, two sections of the Act may be relevant.
Section 13 of the C.P.A. provides:
It is prohibited to stipulate that the consumer, in the event of non-performance of his obligation, must pay costs, penalties or damages, the amount or percentage of which is fixed in advance in the contract, other than accrued interest.
However, this article distinguishes between a contract for the sale or lease of a motor vehicle and a credit agreement, the latter of which is not covered by the above prohibition.
In this sense, a restaurant that sets a fee in advance with the aim of charging it if the customer does not show up for their reservation is an illegal practice.
Pursuant to section 11.4 of the C.P.A., no provision may exclude the application of articles 2125 and 2129 of the Civil Code of Québec. These articles allow the customer to unilaterally terminate contracts. The contractor is then required to return the sums he would have received from the latter.
As a result, the provisions of the Civil Code become a matter of public policy for the merchant who provides a good or service to a consumer. In this sense, a consumer will be able to terminate any contract he has with this business, without the need for the approval of the business.
The Code also adds that if an amount has already been debited prior to the delivery of the good or service, that amount must be remitted to the customer in the event of termination.
Considered in this way, there is no prohibition on a restaurant asking for a deposit in order to proceed with the reservation, as long as that deposit is given to the customer, regardless of whether or not the customer showed up on the scheduled date. It is then illegal to keep a deposit in the event of non-compliance on the part of the customer.
Limitations of the Act
However, this prohibition, since it stems from the Consumer Protection Act, applies only to contracts entered into between a consumer and a merchant. A consumer is a natural person who generally obtains goods or services from a company on his or her own account.
In addition, it is essential to differentiate between the trader and the craftsman and the professional, as the latter are not all governed by the same legal framework.
- Professionals, such as notaries, dentists, psychologists and doctors, are not subject to the CPA. It is usually associated with a professional order and is governed by its corresponding Code of Ethics.
- A craftsman is generally equated with a self-employed worker. For example, an esthetician or hairdresser who works on his or her own account and not in a salon or spa will not be subject to the CPA.
- The trader carries out a regular trading activity with the aim of making a profit. For example, restaurants, supermarkets, and clothing stores are all merchants by the fact that they provide goods or services to consumers. The latter are subject to the CPA.
In short, there is a good chance that the CPA will apply in situations where a person obtains a service from a business. If the latter charges its customers a predetermined fee in the event of cancellation, the customer has several recourse available to him, since this type of practice constitutes an illegal charge within the meaning of the same law.
Remedies in the event of fault
In the case of non-compliance with the law, it is possible to turn to the court in order to obtain a refund of the illegally levied fees. It is also possible to sue for compensatory damages.
Failure to comply with the C.P.A. can result in fines and punitive damages to deter merchants from engaging in abusive behaviour. If you feel that your rights are not being respected, chances are you are not alone in your situation. Do not hesitate to contact us to find out what your options are.
