You may cancel a high-cost credit contract, without any fees or penalties, within 10 days after the date on which both you and the merchant took possession of a duplicate of the contract. You do not have to justify your decision. In legal terms, this is sometimes referred to as contract “resolution.”

Cancellation procedure

To cancel a contract for the loan of money, you must:

  • return the net capital (the borrowed amount) to the merchant, if you received it when both you and the merchant took possession of a duplicate of the contract;
  • otherwise, notify the merchant of the cancellation in writing.

To cancel an open credit contract, you must:

  • remit the part of the granted credit that has been used to the merchant;
  • otherwise, notify the merchant of the cancellation in writing.

To cancel an instalment sale contract, you must:

  • return the item to the merchant, if it was delivered to you when both you and the merchant took possession of a duplicate of the contract;
  • otherwise, notify the merchant of the cancellation in writing.

The merchant is not allowed to have you pay credit charges when you cancel a contract.

Calculating the 10-day deadline

The 10-day deadline begins on the day after the date on which you took possession of your copy of the signed contract.

For example, if the copy of the signed contract was given to you on a Tuesday, you have the right to cancel the contract until Friday of the following week. If the 10th day falls on a statutory holiday or a weekend, the deadline is extended to the next business day.

If the contract is for an instalment sale for a new vehicle, you no longer have this 10-day deadline once the vehicle is delivered to you.

Particularities with regard to pawnbrokers

In the case of a pawnbroking or repurchase agreement, the 10-day deadline does not apply if the merchant lends you a net capital (sum of money) of $500 or less. The contract entered into, as well as all others entered into in the previous 30 days, must be taken into consideration in determining the net capital. You may, however, cancel the contract within 2 days after the date on which both you and the merchant have a duplicate of the contract.

If the debt ratio is too high

Have you entered into a high-cost credit contract despite a debt ratio of more than 45%? You could ask the merchant to cancel the contract or decrease your obligations. You could also ask the courts to do so.

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Last update : August 25, 2020

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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.