CANADIAN 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 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. If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.
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In what I think was the most tragic legal story I saw today – in terms of human nature and near financial gain (but not quite) though not perhaps true human tragedy – the Montreal Gazette reported that a Quebec court has denied a lottery player’s claim to a $27 million jackpot – for a seven second delay in buying his ticket.
According to the Gazette, Montreal Superior Court Judge Marie-Claude Lalande rejected a lawsuit by a player whose ticket had been issued to him mere seconds after the cut-off for the next draw. The result was that his ticket and another won, but alas his was not eligible.
Why? The saving answer for Loto-Québec, the promoter in this case, is that lotteries (including 6-49 draws and the like) and contests are contracts. That was also the unfortunate answer for the entrant who failed to comply with the terms of the lottery, namely that eligibility for this lottery turned not on when the entrant said he wanted to buy the ticket (before the 9:00 cut-off in this case) but rather when Loto-Québec’s computer registered the ticket (seconds after the 9:00 cut-off – 7 seconds to be precise).
A trivial matter you say? Not for a lottery operator faced with determining how to payout a $27 million prize.
According to the Gazette’s note, the entrant was told that one ticket he bought would be for the earlier draw and the other for the later draw, and accepted this (which constituted acceptance of the lottery operator’s terms, and is consistent with the unilateral contract theory of lotteries and contests, in that an operator makes an offer, through the lotteries’ terms, which is accepted by performance by entrants).
Reading the case, in which the Quebec court upheld the lottery’s terms, reminded me too of another similar case I was reading several weeks back – Thierman v. Western Canada Lottery Corp. – in which clear contest rules also saved the promoter, in that case the operators of 6/49, from a significant liability (the payout of a $623,000 prize). In that case, the plaintiff was a subscriber to the 6/49 lottery, whose subscription expired. On receiving a renewal form a month before his subscription ended, the plaintiff delayed returning the form, which was not entered into the lottery’s computer system until after the next draw (in which the plaintiff’s numbers were drawn). The terms of the lottery provided that subscribers should allow four weeks for processing and that renewal forms were deemed to be received on the date of the next draw after being entered into the lottery’s computer system.
The plaintiff argued that the lottery breached its contract with him. The Court disagreed. The Court did find that the general law of contracts applies to lotteries (and promotional contests) and that a contract is formed by a promoter’s offer and a contestant’s performance of the acts required by the offer. In that case, however, the Court found that the necessary conditions to enter and win had not been satisfied because the plaintiff’s renewal form had not been entered into the lottery’s computer system in time and the terms included a provision that the lottery could not ensure the first draw date.
Contests have also been held to be contracts and so well prepared rules can, like lotteries, also mean the difference between success and disaster if an issue arises. While in many cases contest prizes may be too modest for an entrant to raise a dispute in the event an issue arises, for significant promotions (i.e., those involving large prizes or more potential risk for a promoter, such as prizes involving trips or travel that could lead to personal injury or other risk), well prepared contest rules are rather important indeed.
Contractual terms can also be important where companies partner for a promotion, such as where one party organizes and administers a promotion and another markets and advertises the promotion (or where a contest promoter relies on third party service providers to perform key aspects of the promotion – e.g., a tour operator, broadcaster, etc.). In these cases, the potential liability, and importance of a well-prepared contract, may well have much less to do with risk associated with contest entrants than that arising from partners or promoters – e.g., for intellectual property infringement, privacy law or misleading advertising issues. Given that in many cases prizes may range from several hundred to several thousand dollars, but potential liability for a misleading advertising claim can be up to $10 million, the only potential consideration is by no means a prize award that goes wrong.
Some common contract related issues that I see generally in contests and promotions include terms that are not relevant to the particular promotion, U.S. or international rules applied to Canadian promotions, contests that purport to apply across Canada and the U.S. (where it is unclear that rules have been vetted for U.S. or Quebec specific requirements) and contests operated with no (or few) rules at all. Contests operated with no rules at all can lead to a variety of problems, including perhaps most importantly limiting a promoter’s ability to take steps in the event of unforeseen circumstances (contest rules are commonly drafted to give organizers the “sole discretion” to change key terms or make decisions in the event issues arise).
In any event, the bottom line is that lawyers needn’t go overboard in drafting rules for lotteries, contests or other promotions. But having said that, the above cases show that commonsense contract principles, including clarity, precision and relevance to a promotion, can go a long way to reduce potential risk and disasters.
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KEY LEGAL TIPS FOR RUNNING
A PROMOTIONAL CONTEST IN CANADA
The following are some key legal tips for operating a successful and legal contest in Canada:
CRIMINAL CODE
Avoid the illegal lottery offences of the Criminal Code (e.g., include a bona fide “no purchase necessary” entry option and skill element, such as a time-limited, multiple-step mathematical question for potential winners as a condition of awarding prizes).
SHORT RULES (MINI RULES)
Include short rules / mini rules with all of the required Competition Act disclosure requirements for point-of-purchase materials (e.g., print and in-store marketing, social media and Internet sites, packaging and labeling, television and radio spots, etc.).
For more information, see: Canadian Contest Law Forms/Precedents.
LONG RULES (OFFICIAL RULES)
Ensure that precise long rules (i.e., the official contest rules) are included that reflect the details of the contest, anticipate potential contingencies (e.g., technical problems) and set out the terms of the contest as clearly as possible – for example, eligibility requirements, how to enter, prize descriptions, number and value of prizes, draws and award of prizes, odds of winning and indemnifying and releasing the contest sponsor and any co-sponsors or prize sponsors.
Contests are contracts, and so they should be as accurate, clear and precise as possible in the event issues arise.
For more information, see: Canadian Contest Law Forms/Precedents.
WINNER RELEASE FORMS
Consider using winner release forms for contest winners.
While not required by law in Canada, winner release forms are almost always used by contest sponsors to have winners confirm that they have complied with all contest rules and release the sponsor from legal liability. Signing and returning winner releases is also commonly included in contest rules as a condition of awarding a prize.
Winner release forms are particularly important for contests in which there may be higher risk (e.g., where the contest involves high value prizes or a trip prize).
For trip contests, sponsors are generally advised to use winner releases for both winners and any travel companions (and guardian releases for any minor companions).
For more information, see: Canadian Contest Law Forms/Precedents.
FALSE OR MISLEADING ADVERTISING
Ensure that advertising and marketing materials are not false or misleading (i.e., comply with the general civil and criminal misleading advertising sections of the Competition Act, under sections 74.01 and 52).
In this regard, contests in Canada must comply not only with stand-alone contest provisions of the Competition Act (under section 74.06) but also with the general misleading advertising sections of the Competition Act.
It is particularly important to ensure that the marketing materials also match the contest rules and that all material aspects of the contest (e.g., number and type of prizes, prize values, how to enter and win and any conditions/limitations) are accurately described in the short rules, long rules and marketing materials.
CANADIAN FEDERAL ANTI-SPAM LAW (CASL)
Comply with Canada’s federal anti-spam legislation (CASL).
CASL is often relevant when running contests in Canada, including if electronic distribution lists will be used to market the contest, the contest will include the collection of e-mails for marketing unrelated to administration of the contest, if entrants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or entrants are either required or incentivized (e.g., through additional entries) to “share” the contest with friends or family.
Given the potentially severe penalties for violating CASL, which include AMPs of up to CDN $10 million, it is very important for contest sponsors to ensure that they comply with CASL for any electronic marketing related to promotional contests open to Canadians.
For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors.
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CASL Compliance Checklists and Precedents: For information about the CASL compliance checklists and precedents we offer, see: CASL Compliance Checklists and Precedents.
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INTELLECTUAL PROPERTY CONSENTS
Consider whether consents are needed (and if necessary obtained) to reproduce third-party intellectual property – for example, trade-marks, logos, etc. – or to transfer ownership in contest materials – for example, where contestants create original material as part of the contest.
Contest rules in Canada commonly include rights (e.g., a licence) for the sponsor to use information and content contributed by entrants and if entrants will be contributing original content (e.g., photographs, essays, etc.) it is also a good practice for sponsors to include guidelines relating to their rights to use (or reject) any entrant contributed content.
For more information, see: Guidelines for Consumer Generated Content Contests.
U.S. LEGAL ADVICE IF OPEN IN THE U.S.
Obtain U.S. legal advice if the contest will be open to U.S. residents or limit the contest to only Canadian residents.
SOCIAL MEDIA PLATFORM RULES
Comply with social media sites’ terms of use if using social media to promote or host a contest (e.g., Facebook’s Promotions Rules).
Also ensure that appropriate disclosures are made in all social media marketing (i.e., include short rules).
For more information, see: Contests and Social Media.
OTHER COMPETITION LAW
AND ADVERTISING LAW RULES
Consider whether other competition or advertising law rules may apply to a contest. For example, in addition to the stand-alone contest provision (section 74.06), the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising (sections 52 and 74.01) and telemarketing that involves prizes.
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SERVICES AND CONTACT
I am a Toronto competition/antitrust lawyer and advertising/marketing lawyer who helps clients in Toronto, Canada and the US practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
My Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. I also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about my services, see: services
To contact me about a potential legal matter, see: contact
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