Sale, lease, consignment contracts

The contract a registered Ontario dealer hands a customer is not a free-form document. Sections 38 through 45 of Ontario Regulation 333/08 under the Motor Vehicle Dealers Act, 2002 prescribe, paragraph by paragraph, every line item that has to appear on a new vehicle sale, a used vehicle sale, a vehicle lease, a trade-in, and a consignment. Section 30 of the Motor Vehicle Dealers Act is the legal hook: it requires every dealer to disclose in writing to the customer the information set by regulation, in the form set by regulation, at the time set by regulation. Section 50 of the same regulation makes the rule sting by giving the customer a 90-day right to cancel when key disclosures in the contract were wrong or missing.

These rules apply to every retail sale or lease made by a registered dealer to a person who is not another registered dealer. Wholesale dealer-to-dealer trades have a lighter disclosure regime under Ontario Regulation 332/08. The rules also apply to consignment sales, where a registered dealer sells a vehicle on behalf of an exempt owner.

What this category covers

This category tests the mandatory content of retail contracts: the named parties, vehicle identifiers, pricing, payment, the four prescribed informational statements, and the trade-in and consignment carve-outs. It also covers the section 38 deposit-return rule, the section 50 mileage tolerance, and the formatting rules (12-point and 14-point bold) that section 39 imposes on the prescribed statements.

Key rules to remember

Mandatory content of a new vehicle sale contract

Section 39 of Ontario Regulation 333/08 lists 27 paragraphs of mandatory content for a contract to sell a new motor vehicle to a non-dealer purchaser. The contract must show the buyer’s name and address, the dealer’s registered name, registration number, and business address, the salesperson’s registered name and registration number, the date of sale and date of delivery, the vehicle’s colour, body type, and VIN (if known), the manufacturer’s suggested retail price (MSRP) for the vehicle and for each option, the total MSRP, an itemized list of charges the buyer must pay (freight, pre-delivery inspection, fees, levies), the total sale price, the deposit and balance, and an itemized list of all charges payable at delivery that are not part of the contract (such as taxes). It must also list any included items at no extra charge with their fair retail value, and a statement initialled by the buyer if the dealer or salesperson is paid a commission for arranging the financing application from any source other than the dealer.

Used vehicle contracts pull from section 39 and add three rules

Section 40 of the regulation imports most of the section 39 content list and adds three used-specific rules. The contract must include an itemized list of any repairs the dealer has made or will make under the contract, with the buyer’s share of the cost. If a current Safety Standards Certificate has been issued for the vehicle under the Highway Traffic Act, the contract must include the certificate plus the prescribed statement that a Safety Standards Certificate only confirms the vehicle met basic standards on the date of inspection. If the dealer is selling the vehicle on an as-is basis, the contract must contain the prescribed as-is warning, initialled by the buyer. Section 40(3) makes it unlawful to sell a used vehicle as-is to a non-dealer if a current Safety Standards Certificate has been issued for that vehicle.

Leases follow the same backbone with consumer-credit overlay

Section 41 of the regulation requires lease contracts to include the same vehicle, dealer, and salesperson identifiers, plus the trade-in information from section 43 if the lessee is trading a vehicle in. If the lessee is a consumer and Part VIII of the Consumer Protection Act, 2002 applies, the contract must include the lease disclosure information that section 89 of that Act requires, with an itemized list of the items in the lease value. The OMVIC informational statement and the Canadian Motor Vehicle Arbitration Plan statement must appear in 12-point bold font with 14-point bold headings.

Section 42 disclosures travel with every sale and lease

Paragraph 22 of subsection 39(2) and paragraph 11 of subsection 41(1) hook in section 42 of the regulation. Section 42 lists 25 facts that have to appear in the sale or lease contract for any vehicle: the odometer reading or the prescribed unknown-mileage statement, prior use as a daily rental, taxi, limousine, police cruiser, or emergency vehicle, fire damage, flood damage to floorboard level, structural damage or repairs, missing or non-operational airbags, non-operational anti-lock brakes (ABS), required engine, transmission, suspension, electrical, fuel, or air-conditioning repairs, total damage repair costs over $3,000 (with the amount if known), cancellation of the manufacturer’s warranty, declaration as a total loss by an insurer, and classification as irreparable, salvage, or rebuilt under section 199.1 of the Highway Traffic Act. Section 43 adds the trade-in details: the owner’s name and address, vehicle identifiers, recorded odometer reading, the credit or amount paid, and a statement obtained from the person trading in the vehicle covering the same section 42 facts.

Four prescribed statements, in the prescribed font sizes

Subsections 39(3) through 39(6) of the regulation require four block statements in the contract. The “sales final” statement appears on the same page as the buyer’s signature, in 12-point bold font with a 14-point bold heading, telling the buyer the contract is final once signed unless the dealer has failed to comply with certain legal obligations. The OMVIC statement directs the buyer to OMVIC and the Motor Vehicle Dealers Compensation Fund. The Canadian Motor Vehicle Arbitration Plan statement explains that program. For used vehicles, section 40(4) drops the arbitration-plan statement unless the model year is the current year or one of the four preceding years and the vehicle has been driven less than 160,000 kilometres.

Consignment contracts must be in writing

Section 45 of the regulation requires every consignment contract to be in writing and signed by the consignee dealer and the consignor. When the consignor is an exempt individual, the contract must show the consignor’s name and address, the vehicle identifiers, the recorded distance driven (or the prescribed unknown-distance statement), the total amount the dealer will charge (whether a flat fee or a commission share), an estimate of the selling price, a minimum selling price, the term of the contract, and the early-termination conditions. Section 38 also bites here: if a customer hands over a deposit or a trade-in vehicle before any contract is signed, the dealer must immediately return it on request.

Common mistakes

• Hiding negative equity by inflating the vehicle price, the trade-in value, or fees instead of showing it as a separate line. The contract has to reflect the real numbers.
• Treating the as-is statement as boilerplate. It has to be in 12-point bold with the 14-point bold heading, and the buyer has to initial it. Selling a vehicle as-is when a Safety Standards Certificate has been issued for it is a flat breach of section 40(3).
• Using one contract for two vehicles. Each subsection 39(8), 40(7), and 41(7) requires a separate contract per vehicle.
• Skipping the section 42 prior-use line because the dealer “did not know”. Section 50(2) of the regulation lets the buyer cancel even when the dealer did not know and honestly believed the disclosure was accurate.
• Showing the wrong mileage. Section 50(4) deems a disclosed odometer reading accurate only if it is within the lesser of 5 per cent or 1,000 kilometres of the true distance.
• Forgetting the salesperson’s registered name and number on the contract.
• Failing to give the buyer a copy of the signed contract immediately. Subsections 39(10), 40(9), and 41(9) all require it.

How OMVIC enforces this

OMVIC inspectors review contract files on every routine inspection, comparing the file copy to the regulation’s content list and checking the four prescribed statements for the right font size and the right wording. A buyer can also escalate directly to OMVIC, which often produces a complaint-driven file review. Where contract content is wrong or missing, the most common consumer remedy is a section 50 cancellation: the buyer gives written notice within 90 days of receiving the vehicle, the dealer must try to set a return meeting within 20 days (and no later than 30 days), and the dealer must refund every payment the buyer made under the contract and any extended warranty or service plan. Repeated breaches can be referred to the discipline committee under the Code of Ethics, lead to a Licence Appeal Tribunal hearing on a registration proposal, or, on conviction under section 32 of the Motor Vehicle Dealers Act, 2002, draw a fine of up to $50,000 for an individual or $250,000 for a corporation.

Where to learn more

The full text of the contract content rules sits on this site at Ontario Regulation 333/08, with anchors that take you straight to sections 39, 40, 41, 42, 43, 45, and 50. The underlying disclosure duty in section 30 of the Act is on the Motor Vehicle Dealers Act page. The DealerPrep iPhone app carries the wider question pool for paid subscribers, including scenario questions on as-is sales, trade-in disclosure, and the 90-day cancellation timeline.