Motor Vehicle Dealers Act, 2002

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Motor Vehicle Dealers Act, 2002
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Overview
Contents

• Consultation
• Definitions
• Classes
• Disclosure
• Rescission
• Statements on contracts
• Third party warranties
• You also need to know

MVDA 2002
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Overview
Contents

• Consultation
• Definitions
• Classes
• Disclosure
• Rescission
• Statements on contracts
• Third party warranties
• You also need to know

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Consultation
Consultation

• Motor Vehicle Dealers Act, 2002
• Four years of consultation, 1998 - 2002
• Passed unanimously by provincial legislature as
  part of sweeping consumer protection reform in
  December 2002
• MVDA 2002 Regulations
• First consultation draft June 2004
• Second consultation draft June 2007
• Third limited consultation May 2008
• Final release by Cabinet September 2008
• Final January 2010

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Consultation
Consultation

• Authors, participants, influencers
• Owner of the legislation
• Ministry, Office of Legislative Counsel
• Day-to-day administrator of the legislation
• OMVIC
• Dealer associations
• TADA, OADA, UCDA
• Consumer groups
• Car Help Canada, APA, CCC
• Lessor association
• CFLA
• Manufacturer/Distributor associations
• CVMA, AIAMC

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Consultation
Two Regulations General Code of Ethics

• General regulation
• Exemptions
• Registration requirements including classes
• Conduct of registrants including advertising,
  trading rules, contracts, required records and
  accounts
• Compensation Fund administration and claims

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Consultation
Two Regulations General Code of Ethics

• Code of Ethics Regulations
• Integrity
• Disclosure and Marketing
• Disclosure in contracts (wholesale)
• Accountability
• Compliance
• Respect
• Professionalism
• Discipline and Appeals Committees

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Overview
Contents

• Consultation
• Act VS Regulation
• Definitions
• Classes
• Disclosure
• Rescission
• Statements on contracts
• Third party warranties
• You also need to know

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Definitions Act S. 1
Motor Vehicle Dealer

• A person who trades in motor vehicles whether
  for the persons own account, or the account of
  any other person or who holds himself out as
  trading in motor vehicles

automobile, truck, motorcycle, vehicle propelled
by other than muscular power, but NOT snow
vehicle, farm tractor, or vehicle used primarily
for farming or construction purposes
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Definitions Act S. 1
Salesperson

• An individual employed by a motor vehicle
  dealer to trade in motor vehicles on behalf of
  the motor vehicle dealer

employ, appoint, authorize including as
independent contractor
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Definitions Act S. 1
Trade

• Trade includes buying, selling, leasing,
  advertising or exchanging an interest in a motor
  vehicle or inducing or attempting to induce the
  buying, selling, leasing or exchanging of an
  interest in a motor vehicle.

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Overview
Contents

• Consultation
• Definitions
• Highlights
• Classes
• Disclosure
• Rescission
• Statements on contracts
• You also need to know

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Classes of dealers S. 18
Classes of Registration

• 1. General dealer
• i.New and used franchise dealer
• ii.Used independent dealer
• 2. Broker personal shopper
• 3. Wholesaler wholesaler
• 4. Exporter exporter
• 5. Outside Ontario dealer registered out of
  province
• 6. Lease finance dealer GMAC, FinanciaLinx
  etc.
• 7. Fleet lessor
• i.Commercial lessor PHH
• ii.Short term lessor Thrifty, Budget etc.

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Classes of dealers S. 18
Classes of registration

• General dealer, broker or outside Ontario dealer
  cant be registered in another class
• Wholesaler, exporter, lease finance dealer, fleet
  lessor can be registered in more than one class

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Classes of dealers S. 19
General dealer

• Cant be registered in another class
• Can only be registered in one subclass
• Subclass of new and used motor vehicle dealer
  authorized to act as a motor vehicle dealer for
  all trades
• Subclass of used motor vehicles only authorized
  for trades in used motor vehicles

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Classes of dealers S. 19
General dealer new and used subclass

• new motor vehicle means (S. 1),
• a motor vehicle for which no permit has been
  issued
• a first permit was issued to a customer, but
• the customer did not take possession of the
  vehicle and
• the vehicle remained in the possession of the
  dealer until a new permit for the vehicle was
  issued to the dealer within 14 days after the
  issuance of the first permit
• but does not include a motor vehicle that has
  been used in a way for which a permit would have
  been required.
• used motor vehicle means its not a new motor
  vehicle

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Classes of dealers S. 20
Broker

• Cant be registered in any other class
• Cant be associated with any other registrant
• Can only act on behalf of a non-registrant
  customer to facilitate a trade for that customer
• No property interest
• May advertise
• Cant handle the funds
• Cant take possession of the vehicle

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Classes of dealers S. 20
Broker

• Can only represent interests of the customerCan
  only receive compensation from one party to the
  trade
• Cant receive compensation from a third party
• Cant sell warranties or service plans

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Classes of dealers S. 21
Wholesalers

• Can only trade with other registered dealers
• Sell at wholesale auction
• Sell to person located in another jurisdiction
  who is equivalent to registered in that
  jurisdiction

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Classes of dealers S. 22
Exporters

• Can only buy motor vehicles for the purpose of
  export outside of Ontario and to advertise with
  respect to such buying

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Classes of dealers S. 23
Outside Ontario dealers

• Cant be registered in another class
• Can only buy motor vehicles for the purpose of
  export outside of Ontario and to advertise with
  respect to such buying
• Cant have an address for inviting the public or
  for trades in motor vehicles

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Classes of dealers S. 24
Lease finance dealers

• Exempt from requirement to employ registered
  salespersons (except as noted below) s. 3
• Exempt from requirements related to notification
  of shareholder and officer and director changes
  s. 4, s. 6
• Exempt from freeze order and receiver manager
  provisions s. 5
• Cant be associated MVDA ss. 1(2) with general
  dealer unless both are associated with the same
  manufacturer
• Can buy motor vehicles
• Lease to lessee through a general dealer for
  terms longer than 120 days

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Classes of dealers S. 24
Lease finance dealers

• Sell previously leased motor vehicle to
• Lessee or the individual who drove the vehicle,
  or a partner if lessee is partnership (requires
  registered salesperson)
• Registered dealer
• Wholesale auction
• Sell repossessed motor vehicle to
• Registered dealer
• Wholesale auction
• Trade with general dealer or manufacturer
• Trade in a motor vehicle if vehicle is subject of
  contract between a purchaser and a general
  dealer, and general dealer has assigned its
  interest to the lease finance dealer
• Advertise

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Classes of dealers S. 25 and S. 3-6
Fleet lessors both subclasses

• Exempt from requirement to employ registered
  salespersons s. 3
• Exempt from requirements related to notification
  of shareholder and officer and director changes
  s. 4, s. 6
• Exempt from freeze order and receiver manager
  provisions s. 5
• Exempt from requirement to file financial reports
  on request of registrar s. 6

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Classes of dealers S. 25
Fleet lessors commercial lessor subclass

• Can only
• Buy motor vehicles or lease as lessee
• Lease to a non-consumer
• Sell previously leased motor vehicle to
• Lessee or individual who drove the vehicle during
  lease
• Officer, director or partner of lessee
• Registered dealer
• Wholesale auction
• Advertise

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Classes of dealers S. 26
Fleet lessors short-term lessor subclass

• Can only
• Buy motor vehicles or lease as lessee
• Lease to a non-consumer
• Lease to a consumer for term of less than four
  months
• Lease cannot renew automatically
• Sell motor vehicle previously leased to a
  non-consumer to
• Registered dealer
• Wholesale auction
• Advertise

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Overview
Contents

• Consultation
• Definitions
• Classes
• Disclosure
• Rescission
• Statements on contracts
• Third party warranties
• You also need to know

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Types of Disclosure
Disclosure

• Disclosure concerning you, your associates, your
  business
• Disclosure related to vehicle condition, history
• Disclosure related to distance travelled
• Disclosure related to pricing, financing
• Disclosure of information by Registrar

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Disclosure about you and your business
Disclosure you and your business

• Any information requested in the form approved by
  the Registrar (s. 9)
• e.g. Application for registration or renewal
• Includes and applies to associated persons and
  interested persons, signing authorities (Act
  s.1(2), 6(4), Gen Reg s. 60)
• Anything changes, Registrar to be notified within
  five days of change (s. 31)

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Disclosure about vehicle condition, history
Disclosure vehicle condition, history

• Advertising and in contracts (Act s. 28, Gen Reg
  s. 36, 42-43. CoE s. 4-5)
• Wholesale, retail and vehicles brought in on
  trade
• Disclosure obligation indirectly extends to
  wholesale auctions (s. 2(3)3) and to person
  trading-in (s. 43(4)10)
• General material fact plus list of specific
  facts
• Specific fact list varies advertising, retail,
  wholesale
• Penalties for failure to disclose vary and
  include rescission (Act s. 28-29, Gen Reg s. 50,
  CoE s. 4-5)

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Disclosure about vehicle condition, history
Disclosure vehicle condition, history

• No registrant shall make false, misleading or
  deceptive statements in any advertisement,
  circular, pamphlet or material published by any
  means relating to trading in motor vehicles (Act
  s. 28)
• Daily rental, emergency services, taxi, limo
  (s.36)
• Current / previous model year if used, state
  used (s. 36)

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Disclosure about distance travelled
Disclosure distance travelled (s. 42)

• New motor vehicle
• If a specific motor vehicle, maximum distance
  travelled that will be shown on the odometer at
  time vehicle delivered to customer
• If not a specific vehicle, maximum distance
  travelled at time of delivery OR statement
  initialed by customer that no distance specified

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Disclosure about distance travelled
Disclosure distance travelled (s. 42)

• Used motor vehicle
• Total distance driven if that can be determined
• If total distance driven cannot be determined but
  is known at a point in time, then a statement of
  the distance and date, and that the current
  distance driven is higher
• If total distance driven cannot be determined at
  any point in time, a statement that the distance
  driven is unknown, but may be substantially
  higher than that shown
• If odometer faulty, replaced, rolled or in miles,
  a statement to that effect

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Disclosure about pricing and financing
Disclosure pricing, financing (s. 36, 39-41, 44)

• If ad includes price, then price must include
  everything other than taxes
• Vehicles must be available at advertised price
• If limited number or time, that must be stated
• If warranty included, must state term of the
  warranty and maximum individual claim limits

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Disclosure about pricing and financing
Disclosure pricing, financing (s. 36, 39-41, 44)

• If ad placed by group of dealers, each
  responsible for ensuring compliance
• Ensure lender provides CPA-compliant disclosure
  before contract (s. 39-41, 44)
• Disclose if commission to be paid by lender (s.
  39)

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Disclosure by Registrar
Disclosure by Registrar

• Registrar SHALL make available (Act s. 40, Gen
  Reg s. 27)
• Tombstone data
• Classes and conditions
• Proposals carried out or pending against
  registrants
• Charges laid by OMVIC against registrants or
  former registrants
• Convictions of above and disposition
• Current advertising orders against a registrant
• Discipline orders after appeal period expired
• Appeals Committee orders

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Disclosure by Registarar
Disclosure by Registrar contd

• Information that the registrar believes could
  assist in protecting the public, but not
  financial information
• Information above NOT to include individual
  information unless individual is a registrant or
  director, officer
• Information to be available for minimum period,
  usually two years
• Information NOT to be made available in bulk
  except as required by law or to ensure compliance
  with law (e.g. wholesale auction, CAI)

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Overview
Contents

• Consultation
• Definitions
• Classes
• Disclosure
• Rescission
• Statements on contracts
• Third party warranties
• You also need to know

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Rescission
Rescission (Act s. 30, Gen Reg s. 50)

• Purchaser can cancel a contract within 90 days
  for failure to disclose, or inaccurate disclosure
  of
• Distance travelled (within lesser of 5 or 1,000
  km)
• Wrong statement used when distance travelled
  unknown
• Prior use as daily rental, emergency vehicle,
  taxi, limo
• Make, model, trim and model year
• Irreparable, rebuilt or salvage brand
• Cancellation, regardless of whether or not dealer
  knew

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Overview
Contents

• Consultation
• Definitions
• Classes
• Disclosure
• Rescission
• Statements on contracts
• Third party warranties
• You also need to know

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Statements on contracts
Statements on contracts (s. 39-41)

• Adjacent to signature
• Sales Final
• Please review the entire contract, including all
  attached statements, before signing. This
  contract is final and binding once you have
  signed it unless the motor vehicle dealer has
  failed to comply with certain legal obligations.

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Statements on contracts
Statements on contracts (s. 39-41)

• Important Information Respecting Motor Vehicle
  Sales
• In case of any concerns with this sale, you
  should first contact your motor vehicle dealer.
  If concerns persist, you may contact the Ontario
  Motor Vehicle Industry Council as the
  administrative authority designated for
  administering the Motor Vehicle Dealers Act,
  2002.
• You may be eligible for compensation from the
  Motor Vehicle Dealers Compensation Fund if you
  suffer a financial loss from this trade and if
  your dealer is unable or unwilling to make good
  on the loss.
• You may have additional rights at law.

Ontario Motor Vehicle Industry Council 1-800-943-6
002 www.omvic.on.ca
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Statements on contracts
Statements on contracts (s. 39-41)

• When CAMVAP applies
• Canadian Motor Vehicle Arbitration Plan
• The Canadian Motor Vehicle Arbitration Plan may
  be available to resolve disputes concerning
  alleged manufacturers defects or implementation
  of the manufacturers new motor vehicle warranty.

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Statements on contracts
Statements on contracts (s. 39-41)

• When CAMVAP doesnt apply
• Canadian Motor Vehicle Arbitration Plan Not
  Available
• The manufacturer of this vehicle is not a
  participant in the Canadian Motor Vehicle
  Arbitration Plan. Therefore, the program under
  that Plan is not available to resolve disputes
  concerning alleged manufacturers defects or
  implementation of the manufacturers new motor
  vehicle warranty

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Statements on contracts
Statements on contracts (s. 39-41)

• When Safety Standards Certificate supplied
• Safety Standards Certificate
• A safety standards certificate is only an
  indication that the motor vehicle met certain
  basic standards of vehicle safety on the date of
  inspection.

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Statements on contracts
Statements on contracts (s. 39-41)

• When sold as-is
• Vehicle sold as-is
• The motor vehicle sold under this contract is
  being sold as-is and is not represented as
  being in road worthy condition, mechanically
  sound or maintained at any guaranteed level of
  quality. The vehicle may not be fit for use as a
  means of transportation and may require
  substantial repairs at the purchasers expense.
  It may not be possible to register the vehicle to
  be driven in its current condition.

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Overview
Contents

• Consultation
• Definitions
• Classes
• Disclosure
• Rescission
• Statements on contracts
• Third party warranties
• You also need to know

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Rescission
Third party warranties (s. 47)

• Cannot sell an extended warranty unless
• Insured under the Insurance Act, or
• 500,000 irrevocable letter of credit provided to
  Comp Fund, or
• 100,000 irrevocable letter of credit provided to
  Comp Fund if warranty supplied by the dealer
  involved in the trade
• Selling dealer responsible for claims in excess
  of the letter of credit

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Rescission
Third party warranties (s. 47)

• Clear, comprehensible, prominent
• Commencement and end dates expressed by way of
  calendar date, kilometres the vehicle has been
  driven or both
• Maximum individual claim limits, if any
• Maximum total liability, if any
• Amount of the deductible, if any
• Sale price of the warranty, including itemized
  list of all fees or costs that must be paid at
  the time of purchase or afterwards

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Overview
Contents

• Consultation
• Definitions
• Classes
• Disclosure
• Rescission
• Statements on contracts
• Third party warranties
• You also need to know

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Highlights
You also need to know

• Conditional exemptions (s. 3-7)
• Associated and interested persons (Act s. 1, 6)
• Preconditions for registration/renewal (s. 11,
  13)
• Transition provisions (s. 10)
• Refused/revoked person cannot re-apply for
  minimum two years (s. 15)
• Advertising offences, orders, approvals (Act s.
  28, 29, Gen Reg s. 36, 37, CoE s. 4)
• Service plans (s. 48)

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Highlights
You also need to know

• Operation from dwelling (s 28(6))
• Post carry proof of registration (s. 29)
• Salespeople registered to more than 1 dealer (s
  14)
• Consignment agreements (s 45, 46)
• Courts may order restitution (Act s. 33)
• Records vehicles, trades, business (s. 52-54)
• Record retention, reporting of lost records (s.
  55-56)
• Bank accounts, signing authority

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Highlights
You also need to know

• Liens for unpaid fines (Act s. 35)
• Offence to do business with curbsider (Act s. 4)
• 2,500 minimum fine for curbsiding (Act s. 32)
• Comp Fund max payout - 45,000 (s.83)
• Wider eligible Comp Fund claims criteria (s. 79)
• Code of Ethics applies to dealers salespeople
• Disgraceful, dishonourable, unprofessional
  conduct

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• omvic.on.ca
• 416-226-4500
• 1-800-943-6002

MVDA 2002