The Cost of Credit Disclosure Act

Transcription

1 1 COST OF CREDIT DISCLOSURE C-41 The Cost of Credit Disclosure Act Repealed by Chapter C of the Statutes of Saskatchewan, 2006 (effective October 1, 2006). Formerly Chapter C-41 of The Revised Statutes of Saskatchewan, 1978 (effective February 26, 1979) as amended by the Statutes of Saskatchewan, , c.21. NOTE: This consolidation is not official. Amendments have been incorporated for convenience of reference and the original statutes and regulations should be consulted for all purposes of interpretation and application of the law. In order to preserve the integrity of the original statutes and regulations, errors that may have appeared are reproduced in this consolidation.

2 2 C-41 COST OF CREDIT DISCLOSURE Table of Contents 1 Short title 2 Interpretation 3 Disclosure of cost of borrowing in transactions other than variable credit 4 Disclosure in variable credit transactions 5 Lender may charge different cost of borrowing 6 Disclosure where no time or date for payment specified 7 Contracts prior to coming into force of Act not affected 8 Disclosure document 9 Manner of applying percentage rate 10 When cost of borrowing not recoverable 11 Adjustment on payment before due date 12 Advertising by lenders 13 Non-application of Act to certain sales 14 Assignment of negotiable instrument 15 Order to pay indemnity 16 Waiver of benefits ineffective 17 Obligations of assignee of lender 18 Preservation of existing legal rights 19 Offence 20 Regulations

3 3 COST OF CREDIT DISCLOSURE C-41 CHAPTER C-41 An Act to provide for the Fair Disclosure of the Cost of Credit Short title 1 This Act may be cited as The Cost of Credit Disclosure Act. Interpretation 2(1) In this Act: (a) borrower means a person who receives credit; (b) buyer means a person, other than a person or a class of persons to whom this Act is declared by the regulations not to apply, or the agent of a person, who purchases goods or services on credit; (c) cost of borrowing means: (i) when used in relation to variable credit, the charges that the borrower is required to pay monthly or periodically on the unpaid balance from time to time; and (ii) when used in relation to a form of credit other than variable credit, the amount by which: (A) the total sum that the borrower is required to pay if the payments required are made as they become due; exceeds: (B) the sum actually received in cash by the borrower and by any other person on his behalf, or, in the case of a sale of goods or services, the cash price of the goods or services less the sums, if any, credited as a down payment, or in respect of a trade-in, or in respect of any other matter plus, in each case, insurance or official fees, if any, actually paid by the lender or seller; (d) credit means, subject to subsection (2), credit for which a borrower is required to pay and that is: (i) given under an agreement between a seller and a buyer to purchase goods or services by which all or part of the purchase price is payable after the agreement is entered into; or (ii) given by the advancement of money; (e) goods includes tokens, coupons or other documents or things issued or sold by a seller to a buyer that are exchangeable or redeemable for goods or services; (f) lender means a person who extends credit; (g) minister means the member of the Executive Council to whom for the time being is assigned the administration of this Act;

4 4 C-41 COST OF CREDIT DISCLOSURE (h) official fees means fees actually paid or required to be paid to the registration clerk for a search or for registration of any document involved in a credit transaction; (i) person includes an individual, an association of individuals, a partnership, a corporation or an agent of any of them; (j) seller means a person, other than a person or a class of persons to whom this Act is by the regulations declared not to apply, or the agent of a person, who is in the business of selling goods or services to a buyer; (k) trade-in means the consideration in a form other than money or an obligation to pay money given by a buyer to a seller; (l) variable credit includes credit made available under an agreement whereby the lender agrees to make credit available to be used from time to time at the option of the borrower for the purpose of the purchase from time to time of goods or services, and, without limiting the generality of the foregoing, includes credit arrangements commonly known as revolving credit accounts, budget accounts, cyclical accounts and other arrangements of a similar nature. (2) Credit as defined by clause (d) of subsection (1) does not include any sum of money payable by a borrower in either or both of the following cases: (a) (b) on the security of a mortgage of real property; in respect of the sale of goods intended for resale. R.S.S. 1978, c.c-41, s.2. Disclosure of cost of borrowing in transactions other than variable credit 3 Except as provided in section 4, every lender shall, before extending credit to a borrower, provide him with a clear statement in writing showing: (a) the sum in dollars and cents of the aggregate of: (i) in the case of credit given by the advancement of money, the sum actually received in cash by the borrower and by any other person on his behalf including official fees and insurance fees, if any; or (ii) in the case of a sale of goods or services, the cash price of the goods or services plus official fees and insurance fees, if any; (b) where the lender is a seller, the amount, if any, to be credited to the borrower as a down payment or as trade-in or in respect of any other matter; (c) where the lender is a seller, the difference between the cash price stated under subclause (ii) of clause (a) and any amount credited under clause (b); (d) the cost of borrowing expressed as one sum in dollars and cents; (e) the percentage that the cost of borrowing bears to the sum stated: (i) under clause (a) where the lender is not a seller; and

5 5 COST OF CREDIT DISCLOSURE C-41 (ii) under clause (c) where the lender is a seller; expressed as an annual rate on the unpaid balance of the obligation from time to time, which percentage shall be calculated and expressed in the manner prescribed in the regulations; (f) the basis upon which additional charges, if any, are to be made in the event of default; (g) the amounts, if any, included for insurance or official fees. R.S.S. 1978, c.c-41, s.3. Disclosure in variable credit transactions 4 A lender extending variable credit shall: (a) before extending variable credit, provide the borrower with a clear statement in writing showing the cost of borrowing: (i) as an annual percentage or a scale of annual percentages, calculated and expressed in the manner prescribed by the regulations, that the borrower is required to pay monthly or periodically on the unpaid balance, and where applicable the minimum dollars and cents charge, if any; and (ii) expressed in dollars and cents in a schedule of amounts of outstanding balances and the corresponding charges for the cost of borrowing; (b) not less frequently than every three months during the extension of credit, provide the borrower with a clear statement in writing showing in respect of the period covered by the statement: (i) the outstanding balance in the account of the borrower at the beginning of the period; (ii) the amount and date of each extension of credit to the borrower during the period and the classification of the goods or services in respect of which the credit was extended; (iii) the total sum received from or credited to the account of the borrower during the period; (iv) the cost of borrowing, expressed as one sum in dollars and cents, charged during the period; (v) the outstanding balance in the account of the borrower at the end of the period; (vi) the statement referred to in clause (a). R.S.S. 1978, c.c-41, s.4.

6 6 C-41 COST OF CREDIT DISCLOSURE Lender may charge different cost of borrowing 5 Notwithstanding the provisions of section 4, a lender extending variable credit may charge a cost of borrowing different from that set out in the statement required by clause (a) of section 4 on new purchases made under the agreement between the seller and the buyer if: (a) in the agreement between the seller and the buyer, provision is made for the possible alteration of the cost of borrowing, and the buyer has the right to repay all or part of his total indebtedness at any time; and (b) the seller has given the buyer at least thirty days notice of his intention to alter the cost of borrowing on new purchases made after the date of expiry of the notice and in such notice has set out a statement of the revised cost of borrowing in terms of clause (a) of section 4. R.S.S. 1978, c.c-41, s.5. Disclosure where no time or date for payment specified 6 Notwithstanding the provisions of sections 3 and 4, where credit is extended and no time or date for payment or repayment is specified at the time the credit is extended, the cost of borrowing may be disclosed as a statement of the percentage rate for one year on the credit extended and as the amount in dollars and cents that would be payable by the person to whom the credit was extended if payment or repayment was required to be made one year after the credit was extended. R.S.S. 1978, c.c-41, s.6. Contracts prior to coming into force of Act not affected 7 Nothing in sections 3 and 4 affects the terms of a contract entered into before the date of the coming into force of this Act, except that in respect of a contract for the extension of variable credit the vendor shall provide the borrower, during the currency of the remainder of the contract, with the statements referred to in clause (b) of section 4. R.S.S. 1978, c.c-41, s.7. Disclosure document 8 The statement required to be furnished under section 3 or clause (a) of section 4 may be contained in the principal document or instrument relating to the credit transaction or in a separate document. R.S.S. 1978, c.c-41, s.8. Manner of applying percentage rate 9 The percentage rate by which the cost of borrowing is expressed shall be applied in the manner prescribed by the regulations. R.S.S. 1978, c.c-41, s.9. When cost of borrowing not recoverable 10(1) Subject to subsection (2), an agreement extending credit is not rendered void or unenforcible by reason only of a failure to comply with this Act, but in such a case: (a) the buyer or borrower is not obligated to pay; and

7 7 COST OF CREDIT DISCLOSURE C-41 (b) the seller or lender, or the assignee of the seller or lender, has no right to recover; any amount in excess of: (c) the regular cash selling price of the goods or services sold on credit less the sums, if any, credited as a down payment, or in respect of a trade-in or in respect of any other matter; or (d) the sum actually received in cash by the borrower or by any other person on his behalf; except where the failure in compliance results from: (e) a bona fide error in the quotation of the cost of credit either in the dollar and cent expression or in the annual percentage or scale of annual percentages expression referred to in clause (a) of section 4 in which case the seller or lender or the assignee of the seller or lender shall have the right to recover the lesser of the dollar and cent cost expression or the annual percentage or scale of annual percentages expression; or (f) a bona fide error other than in the quotation of the cost of credit and such error did not prevent the buyer or borrower from having knowledge of the essential elements of the agreement in which case the rights of the seller or lender to recover the cost of borrowing shall not be affected. (2) Subject to clauses (e) and (f) of subsection (1), a buyer or borrower who has paid in any amount in excess of the amounts referred to in clause (c) or (d) of subsection (1) is entitled to receive a refund of such excess amount from the seller or lender and may recover such amount by an action in the courts. R.S.S. 1978, c.c-41, s.10. Adjustment on payment before due date 11 Where a sum remaining to be paid under an agreement for credit is paid in full before the term of the agreement expires: (a) the borrower is entitled to a rebate in respect of the cost of borrowing; and (b) the lender is entitled to a part of the cost of borrowing; in an amount determined in the manner prescribed by the regulations. R.S.S. 1978, c.c-41, s.11. Advertising by lenders 12(1) Unless otherwise provided by regulations, no lender shall in any manner whatsoever advertise or cause to be advertised any representation respecting his charge for credit that does not disclose the full cost of borrowing stated as an annual percentage rate and expressed in the manner required by section 3 or 4; but a lender may publish or cause to be published representations that he makes a credit plan available for customers under which the cost of borrowing will be at his usual rates.

8 8 C-41 COST OF CREDIT DISCLOSURE (2) Unless otherwise provided by the regulations, where a lender represents or causes to be represented in a printing, broadcast or other publication any term of a credit transaction other than that there is a charge for credit, the lender shall also include or cause to be included all other relevant terms of the credit transaction including: (a) the sum to be actually received in cash by the borrower or the actual cash price of the goods; (b) the amount of the down payment, if any; (c) the amount of each instalment; and (d) the number of instalments required to pay the total indebtedness including the cost of borrowing. R.S.S. 1978, c.c-41, s.12. Non-application of Act to certain sales 13 Nothing in this Act deprives a lender of his rights with respect to goods sold by him by mail order or catalogue up to and including the first day of January, 1968, or of his rights to collect from a borrower the cost of borrowing at the rate advertised by the lender with respect to goods sold to the borrower by mail order or catalogue up to and including the first day of January, 1968, notwithstanding that the lender in advertising the rate failed to comply with sections 3 and 4. R.S.S. 1978, c.c-41, s.13. Assignment of negotiable instrument 14(1) Where a lender assigns a negotiable instrument given to secure credit, he shall deliver to the assignee with the negotiable instrument a copy of the statement required by section 3 and, where the lender is a seller, a copy of the contract of sale. (2) Every assignee of a negotiable instrument who reassigns the instrument shall deliver to his assignee the statement and contract of sale, if any, received by him in respect of the instrument. (3) Where an assignee of a negotiable instrument to which subsection (2) applies is entitled to recover on the instrument from the maker, the maker is entitled to be indemnified therefor by any assignor of the instrument who has not complied with subsection (1) or (2), as the case may be. R.S.S. 1978, c.c-41, s.14. Order to pay indemnity 15(1) Where an assignor of a negotiable instrument is convicted for a contravention of section 14, the provincial magistrate making the conviction may order the convicted person to indemnify the maker under subsection (3) of section 14. (2) Where an indemnity order is made under subsection (1) in favour of a person who is or becomes liable under a judgment of a court to an assignee of the negotiable instrument in respect of which the indemnity order was made, the person entitled to the indemnity may file the indemnity order in the court in which the judgment was issued.

9 9 COST OF CREDIT DISCLOSURE C-41 (3) Upon the filing of the indemnity order, the registrar or clerk of the court shall issue a default judgment in favour of the person entitled to be indemnified and against the person required by the indemnity order to give the indemnity; and the amount of the default judgment shall be the amount of the judgment referred to in subsection (2) and costs together with the costs of issuing the default judgment, or such less amount as the person entitled to the indemnity by praecipe requests. (4) Upon application therefor, a judge of the court in which the default judgment is issued may set aside the default judgment or may redetermine the amount of the indemnity or make an order of reference for the purpose or may vary the amount of the default judgment. R.S.S. 1978, c.c-41, s.15. Waiver of benefits ineffective 16 Any agreement, verbal or written, express or implied, that provides that this Act or any provision thereof shall not apply or that any benefit or remedy provided by it shall not be available, or which in any way limits, modifies or abrogates or in effect limits, modifies or abrogates any such benefit or remedy, is void. R.S.S. 1978, c.c-41, s.16. Obligations of assignee of lender 17(1) The assignee of any rights of a lender has no greater rights than and is subject to the same obligations, liabilities and duties as the assignor, and the provisions of this Act apply equally to such assignee. (2) Notwithstanding subsection (1), a borrower shall not recover from, or be entitled to set of against, an assignee of the lender an amount greater than the balance owing on the contract at the time of the assignment, and, if there have been two or more assignments, the borrower shall not recover from an assignee who no longer holds the benefit of the contract an amount that exceeds the payments made by the borrower to that assignee. (3) This section applies to assignments made after the thirtieth day of March, R.S.S. 1978, c.c-41, s.17. Preservation of existing legal rights 18 The rights of a buyer or borrower under this Act are in addition to any rights of the buyer or borrower under any other Act or by the operation of law and nothing in this Act shall be construed to derogate from such rights. R.S.S. 1978, c.c-41, s.18. Offence 19(1) Every person who contravenes any provision of this Act or the regulations and every director or officer of a corporation who knowingly concurs in a contravention of this Act or the regulations is guilty of an offence and on summary conviction is liable to a fine of not more than $1,000 and in default to imprisonment for a term not exceeding six months.

10 10 C-41 COST OF CREDIT DISCLOSURE (2) Notwithstanding subsection (1), where the person convicted of an offence under this Act is a corporation, the maximum penalty may be increased to $5,000. (3) No prosecution under this Act shall be instituted more than three years after the time when the subject matter of the prosecution arose. (4) A person shall not be convicted under subsection (1) if he establishes that the contravention was accidental, was a bona fide error, was a clerical error or omission or that the contravention was beyond his control. R.S.S. 1978, c.c-41, s.19. Regulations 20(1) For the purpose of carrying out the provisions of this Act according to their intent, the Lieutenant Governor in Council may make such regulations as are ancillary thereto and are not inconsistent therewith; and every regulation made under and in accordance with the authority granted by this section has the force of law; and, without restricting the generality of the foregoing, the Lieutenant Governor in Council may make such regulations, not inconsistent with any other provision of this Act: (a) declaring that this Act does not apply to a buyer or seller or a class or classes of buyers and sellers, or to a borrower or lender or a class or classes of borrowers or lenders; (b) providing for approval of forms of agreements, assignments and other instruments and documents to be used by lenders; (c) requiring lenders or a class of lenders to submit forms of credit agreements, instruments and other documents used by them to the minister for approval; (d) requiring the use by lenders of credit agreements, instruments and other documents that are in a form approved by the minister and prohibiting the use by lenders or a class of lenders of such agreements, instruments or documents that are not in a form approved by the minister; (e) prescribing the manner in which the cost of borowing stated as a percentage shall be calculated and expressed by lenders or a class of lenders; (f) prescribing the manner of determining the apportionment of the cost of borrowing for the purposes of section 11; (g) regulating forms of advertising relating to the extension of credit by lenders; (h) prescribing the form and content of records relating to lending to be kept by lenders and the length of time for which they shall be kept; (i) prescribing reports and returns to be made by lenders or any class of lenders to the minister; (j) prescribing the manner in which and the tolerances, if any, within which the cost of borrowing stated as a percentage or a sum in dollars shall be calculated, expressed and implied by any class or classes of sellers or lenders which may be different for different classes of sellers or lenders or for different types of businesses carried on by sellers or lenders;

11 11 COST OF CREDIT DISCLOSURE C-41 (k) regulating the advertising by lenders of the cost of borrowing or other terms of credit; (l) defining any expression used in this Act; (m) prescribing forms and providing for their use and that the information in any form shall be verified by affidavit or statuary declaration. (2) A regulation under clause (e) of subsection (1) may state that the manner in which the cost of borowing shall be calculated and expressed may be different for various classes of lenders or for various types of businesses carried on by lenders. R.S.S. 1978, c.c-41, s.20; , c.21, s.19.

12 12 C-41 COST OF CREDIT DISCLOSURE REGINA, SASKATCHEWAN Printed by the authority of THE QUEEN S PRINTER Copyright 1996