Electronic Contracts Michael Geist John D Gregory National

Electronic Contracts Michael Geist, John D. Gregory National Judicial Institute May 10, 2006 Halifax May 10, 2006 Electronic Contracts - NJI

Overview q q q Law generally has no form rule for contracts Law of contracts is media-neutral Question of enforceability comes down to a question of the presence of consent, proof of consent, validity of consent: n o o These are traditional, basic contract concepts Legislation has supported these conclusions Consider examples Halifax May 10, 2006 Electronic Contracts - NJI 2

Legislation o United Nations – Canada and US (etc) n n n o o o All jurisdictions in Canada have something (exc NWT) MB’s key parts not in force – so does it matter? Application is subject to some exceptions General principle: non-discrimination Writing, signature, original, record-retention rules Consent to use is key security feature Legal standard vs prudent standard E-records do not have to be more reliable than paper Halifax May 10, 2006 Electronic Contracts - NJI 3

Legislation o “Functional equivalents”: n Writing: “accessible so as to be usable for subsequent reference” o o n n n Accessible to whom: techie or newbie? “subsequent? ” Not necessarily looking like print e. g. voice recognition Provision: “capable of being retained” (Ont. exception) Originals: “reliable assurance of integrity” Signature: “information in electronic form that a person has created or adopted in order to sign a document and that is in, attached to or associated with the document” Halifax May 10, 2006 Electronic Contracts - NJI 4

Legislation o Contract rules n n n Electronic form does not prevent validity Contracts may be formed by clicking on icons, touching screens, talking to a computer, etc Contracts may be made in dealing with “electronic agents” i. e. software robots Mistakes in dealing with electronic agents may be corrected if program does not allow verification of contract before completion Time and place rules, but no mailbox rule Current issue: presumed receipt in the face of spam and virus filters Halifax May 10, 2006 Electronic Contracts - NJI 5

Forms of consent o Shrinkwrap: terms (of licence) inside box, notice outside n n o Click-through/clickwrap: terms are shown, buyer clicks “I agree” or “OK” n o o Systemshops v King in Canada (1980 s case) Zeidenberg v Pro. CD in US Rudder v Microsoft - an easier case than shrink-wrap Consider examples from web Some limits: Zhu v. Merrill Lynch, Robet v Versus Brokerage Services: experts knew web messages were not always reliable, duty to check before acting on them. n Note: these were cases about one-on-one messages, NOT someone dealing with an impersonal web site, as are almost all of the others. Halifax May 10, 2006 Electronic Contracts - NJI 6

Forms of consent o o o “Browsewrap”: implied consent from mere use of or access to web site Ticket cases etc as parallel in paper world Questions go to notice of terms, accessibility of terms, and fairness Consider examples (inc. Zhu v Merrill Lynch) Enforcement has largely been where people are doing something prohibited by terms that they should have know was bad anyway, e. g. n n Canada: CREA v. Sutton US: Ticketmaster, Register. com, Cairo Halifax May 10, 2006 Electronic Contracts - NJI 7

Forms of consent o o Unilateral Modification: implied or express consent Right to change is widely claimed in web terms Economic model understandable – adhesion contracts Rogers v Kanitz – high-water mark (trial court only) n o Aspencer 1 v Paysystems n o “that’s how business is done on the Net” Not so fast – at least in Quebec (with doubtful dicta) Consumer Protection Act, 2002 (Ontario) n Reverses Kanitz on arbitration and class actions, i. e. not in general about modifications Halifax May 10, 2006 Electronic Contracts - NJI 8

Authentication o of consent n herein of signatures (very briefly) o n n o Singapore: e-mail headers as signatures (lease) England: e-mail headers as not signatures (guarantee) of parties n n o form and intent reliability of attribution – question of proof seldom litigated – but in age of identity theft? of text n how does the signer know what he/she is signing? Halifax May 10, 2006 Electronic Contracts - NJI 9

Jurisdiction o General principles and tests n o o Rudder – click-through choice of forum upheld Specht – obscure choice of forum and process denied May involve choice of law, choice of forum Consumers - special rules n n n o Interactivity, targeting, etc Quebec Civil Code Uniform Law policy EU policies – Rome treaties Hague Convention on Choice of Court (2005) Halifax May 10, 2006 Electronic Contracts - NJI 10

Substance of contract o o Unconscionability defences are media- neutral Some applications in the cases: n n o arbitration clauses class action clauses (overlaps with preceding, not the same) some special rules e. g. Quebec in Dell (to SCC) jurisdiction – choice of lax/business-friendly/inaccessible places? French cases as examples of analysis - AOL. FR and its progeny (at least 4 French ISPs have suffered the same fate now) n “standard” North American clauses held illegal, unconscionable Halifax May 10, 2006 Electronic Contracts - NJI 11

Open questions o o Errors in contracts – facts of Dell, etc Attempts to protect other interests n Notably intersection with copyright o o Digital rights management, technical protection measures No reverse engineering Licences vs sales (“the age of access” but “access to knowledge”) Illegal contracts: e. g. gaming, etc - use of intermediaries to block or enforce (e. g. role of credit card companies, Pay. Pal etc) n Civil and criminal processes may overlap Halifax May 10, 2006 Electronic Contracts - NJI 12

Other legal principles may apply o The usual contract rules apply, e. g. : n n o The usual contracting legislation applies, e. g. : n n o meeting of minds certainty of object consideration AND contracts as to form (legislation does not cure them) Consumer Protection Act Internet Sales Harmonization template (as adopted) Other legislation may apply, as to form or content n UECA yields to contrary intention Halifax May 10, 2006 Electronic Contracts - NJI 13

Internet Sales Harmonization Template o o o The template was adopted by the FPT Consumer Measures Committee in 2001. It is in force in several provinces. Its main terms: o Mandatory disclosure of information (& timing rules) n n o o Halifax May 10, 2006 seller’s identity, location, applicable law description of product, price, terms, remedies Receipts needed Cancellation rights for non-disclosure, non-delivery Electronic Contracts - NJI 14

Conclusion o “What’s old is new again” in the electronic age n n Was there a meeting of the minds? Was the transaction affirmed by the user/consumer? Was the transaction fair? AND questions of form, questions of proof Halifax May 10, 2006 Electronic Contracts - NJI 15

Sources o United Nations Convention on the Use of Electronic Communications in International Contracts n n o Canadian laws on electronic commerce/transactions/information n o o o http: //www. provincialcourt. bc. ca/judgments/pc/2002/05/p 02%5 F 0535. htm Robet v. Versus Brokerage Services Inc. [2001] O. J. No 1341 The Canadian Real Estate Association v. Sutton 2003 IIJCan 22519 (QC S. C. ) n o http: //aix 1. uottawa. ca/~geist/microsoft. htm Wei Zhu v. Merrill Lynch 2002 BCPC 0535 n o http: //www. bitlaw. com/source/cases/copyright/procd. html Rudder v Microsoft (1999), 2 C. P. R. 4 th 474 n o http: //www. ulcc. ca/fr/cls/index. cfm? sec=4&sub=4 b North American Systemshops Ltd. v. King (1989), 99 A. R. 138 (Q. B. ) Pro. CD v Zeidenberg (1996) 86 F. 3 d 1447 (7 th circ. ) n o http: //www. uncitral. org/pdf/english/texts/electcom/2005 Convention. pdf http: //www. uncitral. org/pdf/french/texts/electcom/2005 Convention_f. pdf http: //www. canlii. org/qc/jug/qccs/2003 qccs 11838. html Register. com Inc. v. Verio, Inc. (2000) 126 F. Supp. 2 d 238, affd. (2004) 386 F. 3 d. 283 (2 d circuit) n http: //icann. org/registrars/register. com-verio/decision-23 jan 04. pdf Halifax May 10, 2006 Electronic Contracts - NJI 16

Sources (2) o Ticketmaster Corp. v. Tickets. com, Inc. 2003 U. S. Dist. Lexis 6483 n o o Cairo, Inc. v. Crossmedia Services, Inc. 2005 WL 756610 (N. D. Cal. Apr. 1, 2005) Rogers v. Kanitz (2002), 58 O. R. (3 d) 299 (S. C. J. ) n o o http: //www. bailii. org/ew/cases/EWHC/Ch/2006/813. html Specht v. Netscape Corporation (2 nd Circuit 2002), 306 F 3 d. 17 n o http: //lwb. lawnet. com. sg/legal/lgl/rss/supremecourt/46974. html Mehta v. J. Pereira Fernandes S. A. , [2006] EWHC 813 (Ch) n o http: //www. canlii. org/qc/jug/qccq/2005 qccq 52994. html SM Integrated Transware v Schenker Singapore, [2005] SGHC 58 n o http: //www. dww. com/decisions/kanitz_v_rogers_cable_inc. pdf Aspender 1. com v. Paysystems Corporation 2005 11 JCan 6494 (QC C. Q. ) n o http: //eric_goldman. tripod. com/caselaw/ticketmastermarch 72003. htm http: //cyber. law. harvard. edu/stjohns/Specht_v_Netscape. pdf Civil Code of Quebec Articles 3134 ff re consumer jurisdiction Uniform Law Conference of Canada – jurisdiction in consumer disputes n n http: //www. ulcc. ca/en/poam 2/Jurisdiction_CP_E-Commerce_Enf_Judg_Paper_En. pdf (English) http: //www. ulcc. ca/fr/poam 2/Jurisdiction_CP_E-Commerce_Enf_Judg_Paper_Fr. pdf (French) Halifax May 10, 2006 Electronic Contracts - NJI 17

Sources (3) o o EU jurisdiction policy (“Treaty of Rome II”) Hague Convention on the Choice of Court (2005) n n o Union des consommateurs v. Dell 2004 IIJCan 32168 (Que S. C. ) n o http: //www. legalis. net/jurisprudence-decision. php 3? id_article=1425 Dell Computer Corporation v. Union des consommateurs 2005 QCCA 570 (IIJCan); 2007 SCC 34 n n o http: //www. legalis. net/jurisprudence-decision. php 3? id_article=1211 UFC Que Choisir? c. Tiscali n o http: //www. canlii. org/qc/jug/qccs/2004 qccs 10147. html UFC Que Choisir? / AOL Bertelsmann Online France (TGI Nanterre) n o http: //www. hcch. net/index_en. php? act=conventions. text&cid=98 (English) http: //www. hcch. net/index_fr. php? act=conventions. text&cid=98 (French) http: //www. canlii. org/qc/jug/qcca/2005 qcca 570. html http: //scc. lexum. umontreal. ca/en/2007 scc 34/2007 scc 34. html Internet Sales Harmonization Template n n http: //strategis. ic. gc. ca/epic/internet/inocabc. nsf/vwapj/Sales_Template. pdf/$FILE/Sales_Template. pdf http: //strategis. ic. gc. ca/epic/internet/inocabc. nsf/vwapj/Sales_Template_fr. pdf/$FILE/Sales_Template_fr. pdf Halifax May 10, 2006 Electronic Contracts - NJI 18

Sources (4) o o M. Geist, Internet Law in Canada (Captus Press, 3 d ed, 2003) J. D. Gregory, “Canadian Electronic Commerce Legislation” (2002) 17 Banking & Finance LR 277 n o J. D. Gregory, “The Authentication of Legal Records” (2002), 81 CBR 529 n o o o http: //www. euclid. ca/cbr 2002. pdf C. Kunz et al. , "Browse-Wrap Agreements: Validity of Implied Assent in Electronic Form Agreements", (2003), 59 Bus. Lawyer 279. C. Kunz et al. , "Click-Through Agreements: Strategies for Avoiding Disputes on Validity of Assent", (2001), 57 Bus. Lawyer 401 Parna Sabet, “Consumer Online Contracts in Canada” for ABA Annual Meeting 2005 (part of Risk. EContracts session in Section of Business Law) Charles Morgan, “I Click, You Click, We All Click, But Do We Have a Contract? A Comment on Aspender 1 v Paysystems Corp. ”, (2005), 4 Can Jl Law and Tech #2 109 http: //cjlt. dal. ca/vol 4_no 2/pdfarticles/morgan. pdf British Columbia Law Institute, “Consultation paper on Unfair Contract Terms” (2004) n o http: //www. euclid. ca/bflr 2002. pdf http: //www. bcli. org/pages/projects/unfairterms/Unfair_Contract_Terms_CP. pdf Gautrais: “Les cybercontrats de consommation sont tous illégaux!” n http: //www 2. droit. umontreal. ca/cours/ecommerce/_textes/cyberconsommationillegale. doc Halifax May 10, 2006 Electronic Contracts - NJI 19

Sources (5) o General source list for English and French-language sources (by Vincent Gautrais): n n http: //www. gautrais. com/article. php 3? id_article=42 (electronic contracts) http: //www. gautrais. com/article. php 3? id_article=56 (consumer contracts) Halifax May 10, 2006 Electronic Contracts - NJI 20