Helping New Brunswickers Know the Law

Consumer and Non-Profit Law

Direct Seller's Guide

The Direct Sellers Act regulates door-to-door selling. It requires that door-to-door sellers get licenses and sometimes requires bonding. The Act also has rules about direct sales contracts, including purchasers' cancellation rights. This pamphlet is a guide for people who sell door-to-door

DIRECT SELLING

What kind of sales does the Act cover?

The Direct Sellers Act applies to selling, offering for sale or seeking orders for the sale of goods or services by going from house-to-house. It covers door-to-door sales, home parties and some cases where the seller goes to a home at the purchaser's request. The Act normally only applies to consumer sales.
The seller may be a vendor or a salesperson. A vendor is the person or company responsible for performing the contract. A salesperson is the vendor's representative.

What kind of sales does the Act exclude?

The Direct Sellers Act does not apply to:

• cases where the total is $100 or less.
• mail order transactions.
• newspapers published at least once a week.
• food or food products in a perishable state when delivered.
• primary forest products, coal, gasoline or motive fuel.
• a contract that was solicited, negotiated or concluded at the seller's normal business premises, or at a marketplace, auction, fair or exhibition.
• fishing equipment, farm implements, feed grain, feed supplements, fertilizer, weed spray, nursery stock, treatment of feed or seed grain or growing crops, breeding or care of livestock, custom tilling, seeding or harvesting.
• goods or services as established by regulation.
• a contract made during business a person is authorized to carry on under the Real Estate Agents Act, the Insurance Act, the Securities Act, the Private Occupational Training Act or the Motor Vehicle Act.
• cases where the direct seller did not initiate the dealings with the purchaser or only did so through public advertising. This only applies to vendors who are New Brunswick residents for at least the past year. For example the Act does not apply to a New Brunswick resident vendor who places a newspaper ad, then visits people who respond to it.

LICENSES AND BONDS

Does a seller need a license?

Yes, all vendors and salespeople need a license to sell door-to-door.

As well, each salesperson must pay $35 for a license. A salesperson's license cannot be transferred to anyone else. It expires the same day that the vendor's license expires.

What happens if the seller does not have a license?

If the vendor or salesperson does not have a license or breaks the terms and conditions of a license, the purchaser can cancel the contract up to one year after making it.

Do vendors have to be bonded?

Yes, vendors must be bonded by an insurance company, unless they:

• reside or have business premises in New Brunswick for one year immediately before direct selling, or
• are corporations or partnerships where all shareholders or partners reside in New Brunswick for one year immediately before direct selling.

How much is the bond?

The bond is $5,000 for a vendor who employs up to five salespeople. It is $10,000 if there are more than five.

Under what circumstances is a bond forfeited?

A bond is forfeited if a vendor or salesperson:

• is convicted of an offence under the Act or its regulations,
• is convicted of a criminal offence involving fraud or theft related to a direct sales contract,
• goes bankrupt, or
• fails to pay a judgment related to a direct sales contract.

Do salespeople have to post a bond?

Salespeople do not have to post a bond because the vendor's bond covers them.

Direct sellers can only sell goods or services that follow Canadian laws.

DIRECT SALES CONTRACTS

What information should a direct sales contract include?

A contract must contain information required under the Act, including:

• information about the purchaser's cancellation rights.
• the names of the vendor and salesperson.
• an address where the purchaser can send or deliver a cancellation notice.

The seller must give the purchaser a written copy when they make a contract.

Can a purchaser cancel the contract?

A purchaser can cancel a direct sales contract up to ten days after receiving a copy of the contract, without giving a reason. The seller cannot charge a penalty.

What happens if the seller doesn't deliver?

The seller has up to 30 days after the date stated in the contract (as written or amended) to deliver the goods or start services. Otherwise the purchaser may cancel within one year of making the contract. However if the purchaser accepts the goods or services upon delivery, he or she cannot cancel.

How does a purchaser cancel a direct sales contract?

The purchaser must send or deliver a notice of cancellation to the vendor's address in the contract. The purchaser must be able to show proof of delivery of the cancellation notice.

What are a vendor's obligations if a purchaser cancels a contract?

Upon cancellation, the vendor has up to 15 days to refund the purchaser's money and return any goods taken on trade. If applicable, the purchaser must return any goods in as good condition as received, but not until they get their refund. After refunding the money, the seller may charge the purchaser a reasonable price for any part of the goods consumed or services performed.

What if there is a dispute about the contract?

If the purchaser and the seller have unresolved problems, such as the purchaser not paying, they may consider going to court. If the amount falls under the small claims limit, they may use the small claims procedure.

INVESTIGATIONS AND OFFENCES

Does a seller have to show books and records to officials?

Direct sellers must produce their books and records upon request for Consumer Affairs officials to inspect. If requested, a seller must also give the officials the names and addresses of the seller's direct sales customers.

What can happen to a seller who breaks the rules in the Act?

A corporation or individual who does not comply with the Act is guilty of an offence. The penalties are set out in the Provincial Offences Procedures Act of New Brunswick.

FOR MORE INFORMATION CONTACT:
Financial and Consumer Services Commission
1-866-933-2222
www.fcnb.ca

The Public Legal Education and Information Service of New Brunswick (PLEIS-NB) is a non-profit organization. Its goal is to provide New Brunswickers with information on the law. PLEIS-NB receives funding and in-kind support from Justice Canada, the New Brunswick Law Foundation and the Department of Justice of New Brunswick. We gratefully acknowledge the contribution of the Consumer Affairs branch, New Brunswick Department of Justice, in the development of this pamphlet.

This pamphlet only describes the main features of the Direct Sellers Act. You can get a copy of the Act and regulations from the Queen's Printer. This pamphlet does not contain a complete statement of the law in the area, and changes in the law may occur from time to time. Anyone needing advice on their legal position should consult a lawyer.

Published by:
P.O. Box 6000 Fredericton, N.B.
E3B 5H1 CANADA
(506) 453-5369
Email: pleisnb@web.ca
March 2001
ISBN: 1-55236-082-2

Back to Consumer

Disclaimer: Please note that our website contains general information about the law. This is not a complete statement of the law on particular topics. We try to update our publications often, but laws change frequently so it is important for you to check to make sure the information is up to date.  The information in our publications is not a substitute for legal advice. To receive legal advice about your specific situation, you need to speak to a lawyer.