Canadian COMPETITION LAW

CONTEST RULES/PRECEDENTS

Do you need contest rules/precedents
for a Canadian contest?

We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada).  These include legal precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more.

Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist.

For more information or to order see: Canadian Contest Law Forms/Precedents.

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For more Canadian competition/antitrust, advertising/marketing, CASL (anti-spam) and contest law terms and phrases, see: Competition Law Terms, Advertising Law Terms, CASL Law Terms – A-M, CASL Law Terms – N-Z, Contest Law Terms – A-C, Contest Law Terms – I-M, Contest Law Terms – N-S and Contest Law Terms – T-Z.

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The following are key Canadian contest/sweepstakes law related terms (D-H):

Deceptive prize notice. 

Competition Bureau, Enforcement Guidelines, Application of the Competition Act to Representations on the Internet: “Subsection 53(1) of the [Competition Act] makes it an offence to send deceptive notices of prizes. A notice is deceptive where, among other things, there has not been adequate and fair disclosure of certain information, including facts which materially affect the chances of winning. The offence applies to sending the prize notification or causing it to be sent, whether ‘by electronic or regular mail or by any other means’. Further information on the Bureau’s policy with respect to section 53, can be found in the publication entitled Deceptive Notices of Winning a Prize – Section 53 of the Competition Act available on the Competition Bureau Web site.”

Destination/trip contests.

Trip contests, which are also sometimes called “destination contests”, are often run by local and international governments to promote tourism to their country or destination. Such contests may be either random draw or skill based but will award a trip(s) as the contest prize. Such prizes may include inclusive trips for one or more persons, trip vouchers or cash for a trip, which may be arranged by the contest sponsor or be the responsibility of the winner(s) (e.g., who merely receive cash or trip vouchers as the prize). The contest rules for trip/destination contests typically include a number of common types of contest rules, including a detailed description of the trip prize (and any carve-outs), description of any blackout periods, rules regarding the terms to redeem any flight tickets or travel vouchers (e.g., provided by third party prize sponsors) and indemnifications in favour of the contest sponsor in the event issues arise with the trip. Given that trip/destination contests also commonly award trips for two or more (including travel companions) and involve more potential risk for sponsors than other types of promotions, it is also generally prudent to require winners and their travel companions to sign winner and companion release forms as a condition of awarding the prize(s).

Due diligence defence.

The Competition Act contains pure criminal offences (i.e., requiring subjective intent, such as the criminal misleading advertising provision, section 52) and strict liability offences (i.e., where proof of carrying out the mere actus reus, or act elements, is sufficient to constitute an offence subject to a due diligence defense).  In this regard, due diligence defenses are available under the deceptive telemarketing (section 52.1), deceptive prize notice (section 53(1)) and multi-level marketing (section 55(1)) provisions of the Competition Act.

Competition Bureau, Bulletin, Corporate Compliance Programs (2010): “For certain false or misleading representations and deceptive marketing practices provisions under the Competition Act and certain provisions of the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act, a company may argue that it had exercised due diligence to prevent the conduct.  Although the pre-existence of a program is not, in and of itself, a defence to allegations of wrongdoing under any of the Acts, a credible and effective program may enable a business to demonstrate that it took reasonable steps to avoid contravening the law. In this regard, such a program may support a claim of due diligence. Documented evidence of corporate compliance will assist a company in advancing a defence of due diligence, where available.” … “The existence of a program does not immunize businesses or individuals from enforcement action by the Commissioner or from prosecution by the DPP.20 However, in determining the most appropriate means to resolve cases involving offences where the exercise of due diligence is a defence, the Commissioner may give weight to the pre-existence of a credible and effective program in making sentencing recommendations to the DPP. A program will be considered credible and effective where it can be demonstrated that it was reasonably designed, implemented and enforced in the circumstances.”

“Equal dignity” / no purchase required entry option.

Most, but not all, promotional contests/sweepstakes in Canada must include a no purchase required entry option (i.e., an “alternative means of entry” or “AMOE”) for contest entrants to avoid the illegal lottery offences under section 206(1) of the federal Criminal Code. One such offence, under section 206(1)(f) of the Criminal Code, makes it illegal to require a purchase or other consideration to enter into a game of chance (or mixed chance and skill) where goods, wares or merchandise is awarded as a prize(s).

As such, contest promoters in Canada commonly include some type of no purchase required entry option to enter into promotional contests. Contest sponsors have wide latitude to determine how entrants that do not purchase any product or service can enter into a contest, including offering free online entries, free paper ballots or the traditional requirement to handwrite and mail in a short essay (e.g., 50-100 words) on a topic specified by the sponsor for a free entry.

There is, however, case law in Canada that has held that no purchase entrants must be treated substantially the same as entrants that purchase a product (i.e., substantially treated the same as entrants that purchase a product or service in order to enter the contest). This is commonly referred to as the “equal dignity” requirement for contest entries. For example, in one case, a contest promoter that offered more entry ballots to entrants that paid to enter in a contest to win a car than were offered to no purchase entrants was prosecuted and convicted for violating the Criminal Code. In that case, the court held that the purported no purchase required entry option was in fact a sham and that the promotion was an illegal lottery.

In this regard, in general, private parties cannot operate lotteries in Canada unless they are charities and provincially licensed in the provinces in which they intend to operate the lottery. As such, while contest sponsors can make it somewhat more difficult for no purchase entrants to enter into a contest (e.g., by answering a short survey, mailing in an entry ballot or mailing in a handwritten essay with a stamp to enter), the risk increases the more difficult a contest sponsor makes it for no-purchase entrants to enter into a contest or if purchasers are given more entries than non-purchaser entrants.

Foreign lottery schemes.

Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “Telemarketers offer victims the opportunity to “invest” in tickets in well-known foreign lotteries (e.g., Canada or Australia), or give them a ‘one in six’ chance of winning a substantial prize.  This is a common cross-border offence, since it plays upon the ignorance of victims of the rules (or even the existence) of foreign lotteries.  If offenders purport to sell real lottery chances but deceive victims about their chances of winning, it may be both a gambling offence and fraud; if real chances are sold without deception, it may still be a gambling offence.”

Game.

R. v. World Media Brokers Inc. et al., (1998) 132 C.C.C. (3d) (Ont. Ct.): “’Game’, as a noun, is defined [in The Concise Oxford Dictionary] as ‘(form of) contest played according to rules and decided by skill, strength, or luck’ and, as a verb, as ‘play at games of chance for money, gamble’. ‘Wager’, as both a noun and a verb, is given as a synonym for ‘bet.”

R. v. World Media Brokers Inc. et al., (1998) 132 C.C.C. (3d) (Ont. Ct.): “A lottery is a ‘game” because it is played according to rules and it has winners or losers determined on the basis of luck or chance.”

R. v. Sears Canada Inc. (1989), 28 C.P.R. (3d) 248 (Ont. Dist. Ct.), at para 46: “Nor was it, in my opinion, a game, as to which the observations of Widgery, J. in Adcock v. Wilson, [1967] 1 All E.R. 1028, are helpful, although made in a different context. He said (at page 1037): ‘I think that an ordinary man, when talking of playing a game, is talking about something which involves entertainment, he is talking of something which involves excitement and fun in the common pursuit by a number of competitors of a similar and known object, and it seems to me exceedingly difficult to produce those elements which the common man would ascribe to a game if the participants are in separate places with no communication between them while the activity is going on and thus no sort of opportunity of seeing how their competitors are progressing and, I would have thought, none of the excitement and entertainment which any true game can provide.”

R. v. Ross, [1968] S.C.R. 786, at para 13: “Among dictionary definitions, the following appear to be of some interest: Funk & Wagnalls New Standard Dictionary: ‘The expression games of chance is used to describe those contests the outcome of which is largely governed by chance, as in cards, dice and gambling games generally; and in opposition to games of skill the result of which depends largely upon the dexterity of the contestant.’ Bouvier’s Law Dictionary. Vo Gaming: ‘There are some games which depend altogether upon skill, others which depend upon chance, and others which are of a mixed nature. Billiards is an example of the first; lottery, of the second; and backgammon, of the last’”.

Game of chance.

R. v. Ross, [1968] S.C.R. 786, at para 13: “Among dictionary definitions, the following appear to be of some interest: Funk & Wagnalls New Standard Dictionary: ‘The expression games of chance is used to describe those contests the outcome of which is largely governed by chance, as in cards, dice and gambling games generally; and in opposition to games of skill the result of which depends largely upon the dexterity of the contestant.’ Bouvier’s Law Dictionary. Vo Gaming: ‘There are some games which depend altogether upon skill, others which depend upon chance, and others which are of a mixed nature. Billiards is an example of the first; lottery, of the second; and backgammon, of the last’”.

R. v. Young (1957), 119 C.C.C. 389 (B.C.C.A.), per Coady J.A.: “The question then is did skill enter into this competition? The law is clear that unless the competition is one that depends entirely on chance, it is not a lottery: Hall v. Cox, [1899] 1 Q.B. 198; Scott v. Director of Public Prosecutions, [1914] 2 K.B. 868; R. v. Regina Agricultural & Industrial Exhibition Ass’n Ltd., [1932] 2 W.W.R. 131; Brown v. Bonnycastle, 65 Can C.C. 57, [1936] 1 D.L.R. 295, 43 Man. R. 476.”

R. v. Wallace (1954), 109 C.C.C. 351 (Alta. S.C.), per Ford J.A.: “In addition to the above, cases counsel for the Crown cited the following: R. v. Marshall, [1930] 2 D.L.R. 855, 53 Can. C.C. 118, 65 O.L.R. 279; R. v. Irwin, [1928] 4 D.L.R. 625, 50 Can. C.C. 159, 23 A.L.R. 506; Bailey v. The King, [1938], 3 D.L.R. 670, S.C.R. 427, 70 Can. C.C. 197; R. v. Walker (1953), 106 Can. C.C. 154, 32 M.P.R. 5. Among these, R. v. Irwin and R. v. Long, our Court, Harvey C.J.A. writing the judgments, held that guessing contests of the kind there under consideration are lotteries. The first was a guess as to the number of passengers the Edmonton St. Railway would carry on a future date; the second as to the number of grains of a certain grade of a certain kind of wheat displayed in a glass jar. In the Bailey case, which decided that a ‘Skill Puzzle Board’ that exhibited questions capable of being answered correctly by investigation and search of literary references, was, nevertheless, a means or contrivance for playing a game of chance, or at any rate of mixed chance and skill. Kerwin J., now C.J.C., pointed out that people entering the drug store would be inveigled to pay ten cents for the opportunity of punching a hole and the chance of winning a prize.”

Game of mixed skill and chance.

R. v. Ross, [1968] S.C.R. 786, at para 13: “Among dictionary definitions, the following appear to be of some interest: Funk & Wagnalls New Standard Dictionary: ‘The expression games of chance is used to describe those contests the outcome of which is largely governed by chance, as in cards, dice and gambling games generally; and in opposition to games of skill the result of which depends largely upon the dexterity of the contestant.’ Bouvier’s Law Dictionary. Vo Gaming: ‘There are some games which depend altogether upon skill, others which depend upon chance, and others which are of a mixed nature. Billiards is an example of the first; lottery, of the second; and backgammon, of the last’”.

R. v. Wallace (1954), 109 C.C.C. 351 (Alta. S.C.), per Ford J.A.: “In addition to the above, cases counsel for the Crown cited the following: R. v. Marshall, [1930] 2 D.L.R. 855, 53 Can. C.C. 118, 65 O.L.R. 279; R. v. Irwin, [1928] 4 D.L.R. 625, 50 Can. C.C. 159, 23 A.L.R. 506; Bailey v. The King, [1938], 3 D.L.R. 670, S.C.R. 427, 70 Can. C.C. 197; R. v. Walker (1953), 106 Can. C.C. 154, 32 M.P.R. 5. Among these, R. v. Irwin and R. v. Long, our Court, Harvey C.J.A. writing the judgments, held that guessing contests of the kind there under consideration are lotteries. The first was a guess as to the number of passengers the Edmonton St. Railway would carry on a future date; the second as to the number of grains of a certain grade of a certain kind of wheat displayed in a glass jar. In the Bailey case, which decided that a ‘Skill Puzzle Board’ that exhibited questions capable of being answered correctly by investigation and search of literary references, was, nevertheless, a means or contrivance for playing a game of chance, or at any rate of mixed chance and skill. Kerwin J., now C.J.C., pointed out that people entering the drug store would be inveigled to pay ten cents for the opportunity of punching a hole and the chance of winning a prize.”

Game of skill / skill contest.

R. v. Ross, [1968] S.C.R. 786, at para 13: “Among dictionary definitions, the following appear to be of some interest: Funk & Wagnalls New Standard Dictionary: ‘The expression games of chance is used to describe those contests the outcome of which is largely governed by chance, as in cards, dice and gambling games generally; and in opposition to games of skill the result of which depends largely upon the dexterity of the contestant.’ Bouvier’s Law Dictionary. Vo Gaming: ‘There are some games which depend altogether upon skill, others which depend upon chance, and others which are of a mixed nature. Billiards is an example of the first; lottery, of the second; and backgammon, of the last’”.

R. v. Johnson (1902), 6 Can. C.C. 48, 14 Man. R. 27 (Man. K.B.), as summarized by the court in R. v. Robert Simpson (Regina) Ltd., 1958 CarswellSask 66, 121 C.C.C. 39 (Sask. C.A.), at para 14: “The judgment of the Court [in R. v. Johnson] was delivered by Killam C.J., who stated that the modus operandi advertised and practised was that each purchaser from the accused of goods to a certain amount was given a ticket and upon drawing by chance among the holders of such tickets the winner was to get the horse, buggy and harness if he should shoot a turkey at a distance of 50 yds. In 5 shots. It was stated in the case that the evidence showed that any person could easily shoot the turkey under the circumstances; in other words, that no skill was required. In giving judgment Killam C.J. stated it was a question for the jury whether the interposition of the shooting was intended as a real contest or as a device for covering up a scheme to dispose of the property by lot and upon the evidence the jury was justified in finding as they did.”

[Skill cannot be a mere sham for what is an actual lottery]: Brown v. Bonnycastle, [1936] 1 D.L.R. 295, 65 Can C.C. 57, 43 Man. R. 476: “One is at a loss to understand how it can be considered that a competition which, to be legal under the subsection, must depend on skill or judgment on the part of the competitor, can be based on a study or comparison of 10,000 signatures, which are automatically written, and in which no skill or judgment, solely referable to and evoked by the competition, is exercised. ‘Skill or judgment’ carry their on connotation, being the Court’s formula for drawing a dividing line between what is and what is not a lottery. It is, therefore, clear that the words do not permit of evasion by subterfuge and that skill or judgment must be called for by the competition and exist in an active and subjective sense.”

R. v. Wallace (1954), 109 C.C.C. 351 (Alta S.C.), per Ford J.A., citing Roe v. The King [1949], 2 D.L.R. 785 at p. 789 (S.C.C.): “The case of Roe v. The King, supra (known as the Red River Barrel case), was also referred to. It was held that it required an element of skill to estimate the time that a 45-gallon capacity barrel would take to float the distance of 105 miles from Emerson to the Norwood Bridge in Winnipeg and surely that is so. Everyone who purchased a ticket was entitled to compete.”

Gaming.

Earth Future Lottery, Re, 2002 CarswellPEI 33 (P.E.I. Sup. Ct.), at para 10: “The provisions set out above clearly demonstrate that Parliament does not happily abide gaming activities or any sort in Canada. The little it tolerates, it does so grudgingly. Section 206 is prohibititive in nature, not regulatory. The purpose of Parliament in enacting it was generally to outlaw gaming and lotteries, not just to ensure they would be run honestly. Subsection 206(1) creates a number of indictable offense proscribing a comprehensive range of gaming and gaming related activities. Subsection 206(4) makes it a summary conviction offence to buy, take or receive a lot, ticket, other device mentioned in 206(1). Although s. 207 allows some tightly circumscribed exceptions to s. 206, it too contains a broad prohibition. Subsection 207(3) makes it an offence to do anything for the purpose of the conduct, management, operation of, or participation in a lottery scheme unless the doing of it is authorized by or pursuant to some provision of 207. Thus, even permitted lotteries my strictly adhere to the limits imposed by the terms and condition of s. 207.”

General impression test.

A term used in the context of advertising and marketing law, and in particular in relation to misleading advertising under the Competition Act.  In general, an advertising or marketing claim may contravene the “general” criminal (section 52) or civil (section 74.01) misleading advertising provisions of the Competition Act if it is literally false or misleading or if the “general impression” of the claim is false or misleading.

In this regard, subsection 52(4) of the Competition Act provides: “In a prosecution for a contravention of [the criminal misleading advertising section], the general impression conveyed by a representation as well as its literal meaning shall be taken into account in determining whether or not the representation is false or misleading in a material respect.”  The general civil misleading advertising provisions contain a similar section (subsection 74.03(5)).  As such, when reviewing advertising and marketing for compliance with the misleading advertising provisions of the Act, the entire context of a claim or representation must be considered, including the association and placement of words, the placement and choice of images, graphics and pictures, and as well consideration of whether the omission of material information (e.g., relating to price, quality, scope of services, important conditions, limitations, etc.) may mean that the “general impression” of the overall claim or representation could be seen as false or misleading.

The Competition Bureau’s 2001 Misleading Advertising Guidelines provided one of the most detailed and relevant discussions of the “general impression test”, despite having been since replaced by updated misleading advertising guidelines by the Bureau since:  “Section 52(4) requires a court to take into account the general impression conveyed by a representation, in addition to its literal meaning. … The application of the general impression test is particularly important where: the representation is partially true and partially false, or the representation is capable of two meanings, one of which is false; the representation is literally true but is, in fact, misleading since it fails to reveal certain essential information … the representation is literally or technically true but creates a false impression, for example where the advertised results of a test of a product may not be significant to its use or efficacy but the representation makes it appear otherwise … ; the representation is literally true insofar as the oral or written statements are concerned but the visual part of the representation may create a false impression, for example where it depicts a model which is different from the advertised product …”

Richard v. Time Inc., 2012 SCC 8, at para 56: “In sum, it is our opinion that the test under s. 218 C.P.A. is that of the first impression. In the case of false or misleading advertising, the general impression is the one a person has after an initial contact with the entire advertisement, as it relates to both the layout of the advertisement and the meaning of the words used. This test is similar to the one that must be applied under the Trade-marks Act (R.S.C. 1985, c. T-13) to determine whether a trade-mark causes confusion.”

Richard v. Time Inc., 2012 SCC 8:  “The general impression test provided for in [the Quebec Consumer Protection Act (the “CPA”)] must be applied from a perspective similar to that of ‘ordinary hurried purchasers’, that is, consumers who take no more than ordinary care to observe that which is staring them in the face upon their first contact with an advertisement.  The courts must not conduct their analysis from the perspective of a careful and diligent consumer. … In applying the general impression test provided for in [the CPA] the Quebec courts have traditionally used the words ‘credulous’ and ‘inexperienced’ to describe the consumer in issue in the Act. … In sum, it is clear that … the ‘general impression’ referred to in [the CPA] is the impression of a commercial representation on a credulous and inexperienced consumer. … Thus, in Quebec consumer law, the expression ‘average consumer’ does not refer to a reasonably prudent and diligent person, let alone a well‑informed person.  To meet the objectives of [the CPA] the courts view the average consumer as someone who is not particularly experienced at detecting the falsehoods or subtleties found in commercial representations.”

Professor Claude Masse, Loi sur la protection du consommateur: analyse et commentaires (1999), at p. 828:  “Commercial advertising often plays on the general impression that may be conveyed by an advertisement and even on the literal meaning of the terms used.  Information in advertisements is transmitted quickly.  Advertising relies on the image and the impression of the moment.  This general impression is often what is sought in advertising.  By definition, consumers do not have time to think at length about the real meaning of the messages being conveyed to them or about whether words are being used in their literal sense.  The content of advertising is taken seriously in consumer law.  Consumers do not have to wonder whether or not the promises made to them or the undertakings given are realistic, serious or plausible.  Merchants, manufacturers and advertisers are therefore bound by the content of messages actually conveyed to consumers.”

Competition Bureau, Ensuring Truth in Advertising, Additional Information About the Competition Act, The General Scope of the False or Misleading Representations and Deceptive Marketing Practices Provisions of the Competition Act:  “Subsections 52(4), 52.1(4) and 74.03(5) [of the Competition Act] require a court to take into account the general impression conveyed by a representation, in addition to its literal meaning. This test applies to the following provisions: subsection 52(1) — false or misleading representations; subsection 52.1(3) — deceptive telemarketing; paragraph 74.01(1)(a) — false or misleading representations; paragraph 74.01(1)(b) — performance representations not based on adequate and proper tests; paragraph 74.01(1)(c) — misleading warranties and guarantees; subsections 74.01(2) and 74.01(3) — false or misleading ordinary selling price representations; and section 74.02 — untrue, misleading or unauthorized use of tests and testimonials.  General impression is also an element of subsection 53(1), which prohibits deceptive notices of winning a prize.  The application of the general impression test is particularly important where: the representation is partially true and partially false, or the representation is capable of two meanings, one of which is false; the representation is literally true but is, in fact, misleading since it fails to reveal certain essential information [i.e., the non-disclosure of material information]; the representation is literally or technically true but creates a false impression, for example where the advertised results of a test of a product may not be significant to its use or efficacy but the representation makes it appear otherwise  …; the representation is literally true insofar as the oral or written statements are concerned but the visual part of the representation may create a false impression, for example where it depicts a model which is different from the advertised product  …”

Competition Bureau, Enforcement Guidelines, “Product of Canada” and “Made in Canada” Claims: “When determining whether a ‘Product of Canada’ or ‘Made in Canada’ declaration has been made that is false or misleading, the [Competition Act] requires that the general impression conveyed by a representation as well as its literal meaning, be taken into account.  Thus, when examining a particular representation, the Bureau will consider the general impression conveyed through a combination of words, visual elements, illustrations and overall layout that may alter the plain meaning of a representation.”

R. v. Imperial Tobacco Products Ltd., [1971] 5 W.W.R. 409, 3 C.P.R. (2d) 178 (Alta. S.C.), quoting Federal Trade Commission v. Sterling Drug Inc., 317 F.2d 669 (2^nd Cir. 1963) at 674: “It is therefore necessary in these cases to consider the advertisement in its entirety and not to engage in disputatious dissection.  The entire mosaic should be viewed rather than each tile separately.  The buying public does not ordinarily carefully study or weigh each word in an advertisement.  The ultimate impression upon the mind of the reader arises from the sum total of not only what is said but also of all that is reasonably implied.”

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For more information about Canadian contest/sweepstakes law, see: Contests, Contests and CASL, Contest FAQs, Contest Tips and Contests and Social Media.

For information about the Canadian contest/sweepstakes precedents (template rules) and checklists that we offer for sale, see: Canadian Contest Forms/Precedents.

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