Canada: E-Commerce And The Law

Last Updated: July 25 2001

This is the first of a series of articles to be published in the "Journal of Current Legal Issues" dealing with various issues regarding Internet and, in particular, electronic commerce, commonly known as "e-commerce". Our discussions do not purport to cover exhaustively all the issues relating to e-commerce, a task hardly possible given its continuously evolving nature, but rather to focus on selected aspects thereof with a particular emphasis on its impact on Canadian businesses and consumers. We will look at the present legal framework regulating e-commerce, as well as examine such issues as the impact of e-commerce on general contractual matters, copyrights, consumer protection, the Quebec Charter of the French Language, proof and commercial leasing.

You wake up in the morning and turn on your computer, that is if you bothered turning it off the night before. While your morning coffee is brewing, you go on a weather web site to check forecast for your area. You then drag your mouse to the CNN site to quickly glance at the news. With fresh coffee in one hand, you then point your mouse at the "Favorites" bar on top of your screen and log yourself into your private world of personal finance. You're in a rush, so hastily you make a few transfers of funds between your various accounts, pay your Hydro bill and check transaction history on your credit card. Due to the lack of time, you do not print any hard copies of the operations you have just completed. After all, it surely all got recorded somewhere, virtually that is. You then realize that you will be late for work as appears from the traffic report on your local radio station web-site. In order to make up for lost time, you launch Microsoft Outlook and send an e-mail to your boss with a Word document attachment - a highly confidential draft of a due diligence report your team had just completed a few days ago to which you made a few corrections at home the night before, said report being prepared in the context of a multi-million dollar acquisition. Just before jumping in the shower, you check the Yahoo financial site to see how your favorite stock is doing only to realize that if you do not purchase some of it now you may miss out on a great opportunity. So you log on to your financial institution's site in order to open a discount brokerage account and quickly do the necessary purchase of the shares. While going through the registration process, you are asked to read and agree (or not agree) to accept the content of a long statement which you certainly have no time to read. So in order to complete the

you click on the "I agree" icon and proceed to complete the transaction. Fresh out of the shower, you start panicking realizing that tomorrow is your wedding anniversary and given your work load there is no way for you to have the time to shop around for a gift for your spouse. So just before switching your computer off, you do a quick search on the net for a site where you could pick a present for you spouse with a 24-hour delivery facility. You find what you have been looking for and in a hurry go through the required steps to complete the purchase, last requirement being your credit card number which, although hesitantly at first, you finally release by clicking on the "Complete" icon, somehow reassured by the statement on the screen that it is all being done via a "secure connection".

The above scenario may seem exaggerated and smack of science fiction to some. To an increasing number of others, however, it is the reality of today.

Internet is a world without frontiers and as such it offers a significant number of advantages such as, to mention but a few, accessibility to information, swift communication, an unprecedented ability to exchange ideas and, last but not least, a brand new way to conclude business transactions. At the same time, the emergence of Internet, or electronic data interchange, as it is often referred to ("EDI"), has become a playground for such disturbing issues as child pornography, defamation, copyrights violation and unauthorized access to personal information. Furthermore, the phenomenal speed with which Internet has progressed in the recent years has caught legislators around the world off guard. The example in the opening paragraph was given to illustrate a point of the various issues that come into play when dealing with Internet. To point out but a few: security and confidentiality of information and messages transmitted via EDI, validity of concluded transactions, or the legal implications of clicking on the icon "I agree". It is therefore a matter of concern that the mind-boggling world of Internet still remains largely unregulated. This, fortunately, is beginning to change. Legislators have by now recognized the growing significance of EDI and the need to put into place effective legislation not only to deal with the present state of affairs but also to anticipate future developments in electronic communication whether by EDI, optical or other means. Generally, such legislation is still at the inception stage in most countries. Some of them are currently working on draft legislation focusing on matters ranging from e-commerce to protection of personal information. In others, such bills have already become law. Below, we provide a brief overview of the legislative developments with particular focus on Canada.

The pioneer of e-commerce legislation was the United Nations which in 1996 adopted a Resolution which ultimately gave rise to what is known as the "Model Law" on e-commerce. Acknowledging that an increasing number of international commercial transactions are concluded by means of EDI and other means of communication involving the use of alternatives to paper-based methods of communication and storage of information, the ambitious objective of the Model Law was, in broad terms, to provide individual States with an effective framework for introducing or modernizing their legislation as well as to provide standards for international uniformity with respect to e-commerce legislation. The main principle laid down by the UN blueprint for e-commerce legislation is that "information shall not be denied legal effect, validity or enforceability solely on the grounds that that it is not contained in the data message purporting to give rise to such legal effect, but is merely referred to in that data message". In this regard, "data message" is defined as "information generated, sent, received or stored by electronic, optical or other similar means including, but not limited to, EDI, electronic mail, telegram, telex or telecopy". To clarify, in the context of commercial transactions, for instance, unless otherwise agreed by the parties, an offer and the acceptance of an offer may be expressed by means of data messages. Where a data message is used solely in the formation of a contract, that contract shall not be denied validity or enforceability on the sole ground that a data message was used for that purpose (Model Law, Art. 11). The idea behind this principle was to provide recognition that only because information is not provided in the traditional paper-form, such information should not be discriminated against and should have the same validity and enforceability as its paper equivalent. It is worth noting that the Model Law attempts to provide an effective framework for determining the validity and enforceability of transactions in the electronic environment. For instance, e-commerce relies quite heavily on the notion of incorporation by reference. In layman's terms, it means that an electronic message will frequently refer the recipient to related sites by way of hyperlinks or .pdf files (i.e. files in a particular text format) to complete the information transmitted. An example of such incorporation by reference is a distributor who offers a product for sale providing a very general description of the product while inviting the recipient to click on a hyperlink allowing direct access to the manufacturer's web site for detailed product description. Furthermore, the recipient is invited to open a .pdf. file to check the terms of warranty for the product. Under the circumstances, the validity of a concluded transaction between the recipient and the distributor will depend on a number of factors such as accessibility of the referenced web site or text, attached costs, if any, of such access, authentication of the owner or author of the site or text in question and communication of latest up-dates or correction of errors. In addition, in order to deal with the traditional elements regarding conclusions of contracts, the Model Law extends the meaning of such terms as "in writing", "original" and "signature". In this regard, the Model Law offers a set of guidelines or checkpoints to be used in determining the validity or enforceability of a transaction concluded electronically ranging from the sophistication of the equipment used by the parties, the nature of their trade activity (are they sophisticated buyers and sellers?), the particular statutory signature and documentary requirements in a given jurisdiction, the certainty of identification and intention of the parties and other relevant factors. The Model Law does emphasize its limitations by pointing out the existence of areas regulated by statutes prescribing particular forms of documentation and record as evidence of transaction validity. The example of wills, immoveable transactions, consumer protection laws are a few illustrations of such limitations.

The Model Law has so far proved an effective cornerstone for national legislation. The European Community has based its draft laws on e-commerce on the Model Law. In Canada, Saskatchewan was the first province to draft its legislation based on the UN document. However, Ontario was the first Canadian Province to enact such legislation, the "Electronic Commerce Act 2000" (Bill 88), which received royal sanction on October 16, 2000. Entitled "An act to promote the use of information technology in commercial and other transactions by resolving legal uncertainties and removing statutory barriers that effect electronic communication", the Ontario law incorporates the principles of the Model Law. It provides various definitions of the term "electronic" in order to cover existing and future technologies of communication confirming, in essence, that the use of electronic communication rather than paper documents does not in itself affect the legal validity of such communication. The law also introduces provisions dealing with public bodies in the context of electronic filings and payment, including requirements prescribed by the Minister of Finance. Finally, the law sets out principles regarding contractual transactions concluded electronically.

The National Assembly of Quebec tabled last year Bill No. 161 entitled the "Loi concernant le cadre juridique des technologies de l'information" affirming the principle entrenched in the Model Law with respect to the validity and enforceability of transactions concluded electronically, the whole with a view to harmonize national and international transactions. The Bill also addresses the issues of security and preservation of electronic communication. The specific provision of this legislation will be discussed in detail in our next issue.

On the federal level, the "Personal Information Protection and Electronic Documents Act" focuses on the protection of personal information and does not deal with contractual matters as these are in the competence of provincial jurisdiction. The Act addresses the issues of protection of personal information exchanged between public bodies, private businesses and individuals alike.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.