Canada: Personal Information And Privacy Issues In Business Transactions: Part 1

The free flow of information is essential to all business transactions and presents both opportunities and obligations for the organizations involved. Inadequate appreciation for the complexity of privacy legislation and the related implications can become not only an obstacle but a liability. This will be the first part in a series of articles that canvass the privacy issues that arise during business transactions. Part 1 will review the various legal regimes in Canada that regulate the collection, use and disclosure of personal information during business transactions. Part 2 will look specifically at issues that arise during the due diligence phase of business transactions.

Collecting Personal Information Legally During Business Transactions

(a) Privacy Legislation in Canada

The Personal Information Protection and Electronic Documents Act ("PIPEDA") is the federal legislation responsible for regulating the collection, use and disclosure of personal information by private organizations in Canada.1 Provincial privacy legislation may be applicable if the private organization operates in a province that has "substantially similar legislation" as PIPEDA. Currently, British Columbia, Alberta and Quebec have privacy legislation that is substantially similar to PIPEDA regulating the private sector. As a result, PIPEDA does not apply to certain entities in these provinces.

Moreover, if the private organization is involved in cross-border transactions, the transaction may be regulated by a complex combination of PIPEDA, provincial legislation, and the privacy regime of another country. Due to variations in privacy legislation, understanding which legislative matrix governs a transaction is essential.

"Personal information" is generally defined as information about an identifiable individual. As a general rule, but with limited exceptions, consent must be obtained from an individual prior to the collection, use or disclosure of personal information relating to that individual. While the Alberta and BC statutes provide exceptions to this general rule, both PIPEDA and Quebec's privacy statute lack exceptions for business transactions. However, it is notable that PIPEDA excludes the name, title, business address and telephone number of an employee from the definition of personal information some information can be disclosed without consent. Still, this is far more restrictive than either Alberta or BC's statutes which explicitly provides an exception from the consent requirement during business transactions (the "Business Transactions Exception").

Amendments, including the incorporation of a business transactions exception that would bring PIPEDA in line with the Alberta and BC statutes, were most recently tabled by Bill C-12 in 2011. However, it would appear that amendment attempts have grown stagnant as no Parliamentary action has been taken with the bill since first reading occurred on September 29, 2011. Although amendments may not be forthcoming, section 29 of PIPEDA requires Parliament to review Part 1 of the Act every five years and such a review could act to reinvigorate amendment attempts.

In the meantime, balancing compliance requirements under PIPEDA and obligations between transacting parties will continue to be very difficult. Obtaining individual consents to disclose personal information in the course of a business transaction on an ad hoc basis can be impractical, if not impossible. One solution around this is to ensure that all necessary consent is obtained in advance through the organization's privacy policy by having such privacy policy contemplate the collection, use, and disclosure of personal information during such transactions.

Further, obtaining consents or complying with notification requirements set out in the applicable privacy legislation would result in the breach of non-disclosure agreements or confidentiality agreements entered in the course of the transaction. Although it can be a risky proposition, some organizations try to manage the conflicting obligations by relying on implied consent to collect, use and disclose personal information during business transactions. The sensitivity of the information determines whether or not implied consent is adequate under PIPEDA. If information is likely to be sensitive, implied consent is not adequate.

(b) Privacy legislation in Alberta and British Columbia

As noted above, both Alberta and BC's privacy statutes provide specific exceptions to the general rule requiring consent for information collected, used and disclosed during business transactions. Both statutes define business transactions broadly to include any purchase, sale, lease, merger, amalgamation, acquisition, or disposal of an organization, portion of an organization, security interest, or asset of an organization.2

The business transactions exception provided in Alberta's Personal Information Protection Act ("Alberta's PIPA") allows for the exchange of personal information that may be necessary to determine whether to proceed with, necessary to carry out, or necessary to complete a business transaction. This exception allows for fairly broad disclosure of information related to identifiable individuals.

BC's Personal Information Protection Act ("BC's PIPA") includes a substantially similar exception to Alberta's, but incorporates a notification requirement in the event that the organizations choose to proceed with the transaction. If this is the case, any person whose information has been disclosed must be notified that the business transaction has taken place and that their personal information has been disclosed. Unlike Alberta's PIPA, which allows disclosure of information related to "identifiable individuals", BC's PIPA expressly states that disclosure related to employees, customers, directors, officers, and shareholders, is allowed, subject to the limitations mentioned above.

Both BC's and Alberta's exceptions are conditional on the parties entering into a confidentiality or non-disclosure agreement. The agreement must define the types of information to be collected as well as the purposes for collection and include a declaration that the information will be used solely for those purposes. A provision mandating the return or destruction of information in the event that the transaction is no longer pursued is also required. These agreements are important not only for protecting the information but in establishing liability in the event that the agreement is breached.

(c) Cross Border Transactions

The transfer of personal information outside of Canada is often undertaken by sending physical files, sending digital copies, or storing information on remote servers. Increasingly, information is stored on remote servers, or "in the cloud", and acquirers are given access to that server during the transaction. (For more information on cloud computing and the privacy considerations that are raised, please see my blog on Cloud Computing and Privacy Issues: Implications for Businesses.) Both the target and acquirer need to be cautious of the implications that transferring personal information outside of Canada creates. Most importantly, the legislative matrix that regulates the data will likely change and notification obligations may be imposed.

The federal Privacy Commissioner has noted that, where personal information is transferred to a foreign third party, that information is subject to the laws of the foreign country, and no contract or contractual provision can override those laws. Thus, the Commissioner has stated that, while consent is not required, at the very least, an organization in Canada that transfers personal information to a foreign third party should at least notify affected individuals, depending on the sensitivity of the personal information, that their information may be stored or accessed outside Canada and of the potential impact this may have on their privacy rights.

Unlike PIPEDA, it is a mandatory requirement for organizations to notify individuals before transferring personal information to a foreign service provider under Alberta's PIPA. However, as mentioned above, notifying individuals of collection, use or disclosure of their personal information during a business transaction may breach non-disclosure or confidentiality agreements between the transacting parties. Weighing notification requirements with confidentiality obligations requires a thorough risk analysis.

Tips for Business

Given the foregoing considerations that arise during business transactions, organizations may benefit from the following tips in relation to personal information:

  1. Implement a privacy policy that contemplates the collection, use, or disclosure of "personal information" during business transactions and cross-border transactions.
  2. Anonymous information is not "personal information." Make information anonymous by removing any identifying information such as a person's name or address.
  3. If relying on implied consent under PIPEDA ensure that personal information is not sensitive.
  4. Increase protection through the use of confidentiality or non-disclosure agreements. Include provisions outlining procedures for personal information in the event that the transaction is no longer pursued and address liability in the event of a breach.
  5. If personal information is stored or transferred outside of Canada, ensure adequate contractual provisions are in place to protect both the information and the organization.

To view original article, please click here.


* Andrea Gray is an Articling Student at McCarthy Tétrault.

1. Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5 (Can.).

2. Personal Information Protection Act, 2003, c. P-6.5, s.22(1)(a); Personal Information Protection Act, S.B.C. 2003, c.63, s.20(1).

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
Related Video
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
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 you may opt out by clicking here

    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.

    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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.

    By clicking Register you state you have read and agree to our Terms and Conditions