General Contracting and the Fair Trade Act


General Contracting and the Fair Trade Act

If you are a general contractor, or if you are a homeowner thinking of hiring a contractor, you may want to consider how the Fair Trade Act of Alberta creates rights for the consumer in this context.  In general terms, any contractor who engages in “prepaid contracting” needs to have a license issued by the government.  Prepaid contracting is a situation where some or all of the purchase price of a contract is paid before the contract is complete.  In other words, it is illegal for a contractor to take a deposit or progress payments on a residential building contract unless he or she has this license.  This is a consumer protection measure designed to protect the public against unscrupulous businesspeople, and it ensures that contractual relationships between the consumer and the contractor are kept fair and equitable.

Like all things in the law, this licensing requirement is not a hard and fast rule applicable to all situations.  Not all contracting is prepaid contracting, and not all prepaid contracting requires a prepaid contracting license.  The biggest exception from this rule applies to those contractors who are registered with either Alberta or National New Home Warranty programs.  It also does not apply to contracts between contractors and subcontractors.  If you have any questions or concerns about whether you need a prepaid contracting license, or if you have concerns about your current contractor, it is best to discuss your individual situation with a qualified legal professional.

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