Electronic Communications Convention - Impact on Quebec 2008

III. Methods of Forming Electronic Contracts

[19] Part 1, which we will now begin, consists of an examination of the nub of the Convention: a discussion of the reasons why the Convention should be considered. The purpose of the Convention is to perform two essential functions, identified earlier: first, it seeks to incorporate greater legal certainty by defining major concepts in the law of contracts in order for contracts not be connected with paper alone, such as writing, signature and original (Section 1). Second, it offers a guide regarding certain more specific elements relating to the formation of electronic contracts (Section 2).

1 – Rules Governing Form

[20] The functional equivalence referred to above is not merely a theoretical principle. Its objective is, first and foremost, to allow for concepts to be defined without reference to the medium, including, most importantly, writing, signature and original, as set out in article 9 of the Convention.

1.1 – Writing

[21] The concept of writing is undoubtedly the main source of differences between the Convention and the Quebec law. I would even say the only true opposition; a divergence that is even more problematic given that it refers to a central element of the two instruments. In article 9(2), the Convention provides that a writing exists if

the information contained [in the electronic communication] is accessible so as to be usable for subsequent reference. (Emphasis added)

The test of “subsequent reference” is not included in the LFIT Act,[30] which instead opts for the test of integrity, as set out in article 2838 C.C.Q.

In addition to meeting all other legal requirements, the integrity of a copy of a statute, an authentic writing, a semi-authentic writing or a private writing drawn up in a medium based on information technology must be ensured for it to be used to adduce proof in the same way as a writing of the same kind drawn up as a paper document. (Emphasis added)

[22] In Canada, therefore, we are faced with a very simple situation. On the one hand, most of the provinces have enacted legislation that incorporates the test of “subsequent reference”, taken from the 1996 Model Law. This was the case in Alberta (section 11), British Columbia (section 6), Prince Edward Island (section 7), New Brunswick (section 7), Nova Scotia (section 8), Ontario (section 6), Saskatchewan (section 9), Newfoundland (section 8) and Yukon (section 7). Manitoba alone does not seem to have followed the definition of writing in relation to this criterion, or by any other, in fact.[31] On the other hand, Quebec law has relied on the criterion of “integrity”.

[23] In this report, our preference for one of the criterion over the other will be discussed in Part 2. Before we do however, it is important to note the following two factors.

[24] First, in technical terms, these criteria are met in very different ways. An Internet page that is accessible after a contract is signed could meet the “subsequent reference” requirement, but could have been altered by the author; it would therefore be accessible, but its integrity would not be ensured. A “pdf” file, on the other hand, could meet the integrity criterion, but, without that function being added, it would not necessarily meet the “subsequent reference” criterion.

[25] Second, these criteria both derive from the principle of functional equivalence. What are these functions of a writing? Historically, one of the very first studies of this subject is quite simply the Guide to Enactment of the 1996 Model Law, which identified 11 functions that could be associated with a writing.

In the preparation of the Model Law, particular attention was paid to the functions traditionally performed by various kinds of “writings” in a paper-based environment. For example, the following non-exhaustive list indicates reasons why national laws require the use of “writings”: (1) to ensure that there would be tangible evidence of the existence and nature of the intent of the parties to bind themselves; (2) to help the parties be aware of the consequences of their entering into a contract; (3) to provide that a document would be legible by all; (4) to provide that a document would remain unaltered over time and provide a permanent record of a transaction; (5) to allow for the reproduction of a document so that each party would hold a copy of the same data; (6) to allow for the authentication of data by means of a signature; (7) to provide that a document would be in a form acceptable to public authorities and courts; (8) to finalize the intent of the author of the “writing” and provide a record of that intent; (9) to allow for the easy storage of data in a tangible form; (10) to facilitate control and subsequent audit for accounting, tax or regulatory purposes; and (11) to bring legal rights and obligations into existence in those cases where a “writing” was required for validity purposes.[32] (Emphases added)

[26] Under the Convention and the 1996 Model Law before it, those functions can be met if the document intended to perform the role of a writing is accessible and permits “subsequent reference”. It was also provided that the criterion selected should not be too stringent, and that the requirement for a writing should be considered

as the lowest layer in a hierarchy of form requirements, which provide distinct levels of reliability, traceability and  unalterability with respect to paper documents. [33] (Emphasis added)

[27] The LFIT Act, and consequently the C.C.Q., opted instead for integrity. Under the functional equivalence criterion, the idea was that the function of a document as evidence, regardless of the medium, had to meet that requirement. We would note that the LFIT Act seems to consider only the ad probationem function[34] and not the ad validatem function, a distinction not found in the Convention. The symbolic aspect that may attach to a writing – what the Guide to Enactment of the 1996 Model Law calls helping the parties to “be aware” – is absolutely not conveyed by the criterion of accessibility and “subsequent reference”.

[28] There are therefore two conflicting approaches, both of which are found in other countries. “Subsequent reference” is found, for example, in Australia,[35] and in one case in the United States.[36] The “integrity” test is used in France, among others.[37] Given these difficulties, it is noteworthy that some Canadian jurisdictions have tried to avoid the problem by combining requirements.[38] While that is certainly possible, it is not an approach that we would think appropriate to recommend, having regard to the additional workload it would generate.

1.2– Signature

[29] Signature, in our view, does not cause as much problems. Although the definition has changed since 1996 and the Model Law, the Convention is based on two groups of elements identified in article 9(3). The first relates to the two cumulative functions of a signature, under the principle of functional equivalence: (1) the identity of the signer and (2) the intention in respect of “the information contained in the electronic communication”. The second also relates to a level of reliability proportionate to the circumstances.

[30] If we compare that language to the Quebec law, we can see that only the first group is formally required. Article 2827 C.C.Q., which was left almost intact by the LFIT Act,[39] deals with signature as follows:

2827. A signature is the affixing by a person, to a writing, of his name or the distinctive mark which he regularly uses to signify his intention.

[31] That article refers expressly to the two functions cited above. Two functions are set out in the C.C.Q., even though there is a change that distinguishes the Convention from the 1996 Model Law. While the Model Law refers to the approval of the content of the information by the person who signed, the Convention instead uses the expression “that party’s intention in respect of the information”. That more neutral expression, which is doubtless farther removed from contract law, does not seem to us to present any problems in terms of the Quebec definition, which uses the term “intention” [consentement in the French version of art. 2827 – Tr.].

[32] On the other hand, there is nothing in the C.C.Q. regarding the reliability requirement set out in article 9(3)b)(i) of the Convention. Nonetheless, while it is not express, that condition is certainly implicit for any method of signature. Technique has in fact never been disregarded in assessing a signature, whether handwritten or not. Simply put, paper as a technology has become so common, widely known and socially understood that any reference to the support as a technology has become identical to the concept of signature itself – identical, but not disregarded. As well, in analyzing the paper medium when a signature is to be disproved, examination of the signature generally called for an expert in “technology” (such as a graphologist) who relied on technological data to support his or her position.[40]

[33] The fact that there is no conflict between the Quebec law and the Convention in respect of signature is particularly apparent when article 9(3)b)(ii) introduces greater flexibility by moving away from the criterion of reliability. That requirement is significantly diminished by the introduction of that article, which treats signature as being fully achieved if the two requirements in the first group have been met.

1.3 – Original

[34] On the question of the original, here again there are certain dissimilarities between the Convention and Quebec law, more specifically section 12 of the LFIT Act which defines “original”. This is particularly understandable in that the original has a connection with the writing, which, as we have seen, is dealt with differently in the two sets of rules. The main difference lies in the fact that the LFIT Act has identified the functions an original may serve more precisely. Three functions are cited expressly:

12.  A technology-based document may fulfil the functions of an original. To that end, the integrity of the document must be ensured and, where the desired function is to establish

1) that the document is the source document from which copies are made, the components of the source document must be retained so that they may subsequently be used as a reference;

2) that the document is unique, its components or its medium must be structured by a process that makes it possible to verify that the document is unique, in particular through the inclusion of an exclusive or distinctive component or the exclusion of any form of reproduction;

3) that the document is the first form of a document linked to a person, its components or its medium must be structured by a process that makes it possible to verify that the document is unique, to identify the person with whom the document is linked and to maintain the link throughout the life cycle of the document. [41] (Emphases added)

[35] The first function is the most common, and could refer, for example, to a contract between two parties. An example of the second is a bearer bond or bill of lading. The third could be a will or digital certificate.

[36] The Convention stops short of this; article 9(4) appears to provide for the first scenario in the Quebec statute, but not for the other two.

4. Where the law requires that a communication or a contract should be made available or retained in its original form, or provides consequences for the absence of an original, that requirement is met in relation to an electronic communication if:

(a) There exists a reliable assurance as to the integrity of the information it contains from the time when it was first generated in its final form, as an electronic communication or otherwise; and

(b) Where it is required that the information it contains be made available, that information is capable of being displayed to the person to whom it is to be made available.

[37] Here again, functional equivalence is used in both cases to determine the criteria, which take almost the same form in this instance. The two texts have the common features of (1) the necessary integrity, which is further defined very similarly in section 6, para. 2 of the LFIT Act and article 9(5) of the Convention,[42] throughout the life cycle of the document, and also both require (2) that the original be accessible: while the Convention uses the term “available”, the LFIT Act requires that it be kept for “subsequent reference”, the two being very similar.

[38] No major conflict arises in respect of how the criteria for the first function of the original are met. On the other hand, as we noted earlier, the Convention is silent regarding the unique nature sometimes associated with certain originals - even though this function was discussed at length at the UNCITRAL meetings - and on the connection between the original and a person. The first function is undoubtedly the most common in the area to which the Convention applies – international contracts. As well, the unique nature function is largely secondary in international commerce, as a result of the exclusion in article 2(2) of numerous scenarios associated with that function,[43] and the function involving connection with a person is also considerably diminished when article 2(1)(a) excludes “[c]ontracts concluded for personal, family or household purposes”.

[39] Once again, when the Convention opts for defining only the lowest common denominator, it is potentially in conflict with Quebec law. This time, the problem lies not in the criteria used, which are very similar, but in identifying the functions that an original could serve. In the event that a court were to have to interpret the conflict between the two instruments, it might well conclude by saying that the Convention will not apply where the Quebec law is more precise than the Convention. It might also find that the Quebec law will not apply where the Convention did not think it wise to define criteria for an original intended to fulfil certain functions. Nonetheless, this situation is difficult to predict, and the applicable law could change, depending on the function that the original is meant to fulfil, particularly given that it is not a simple matter to identify the functions of an original. In a very small number of cases a risk of discrepancy between the two instruments might arise.

2 – Other Methods of Forming Electronic Contracts

[40] In addition to the rules governing form for the trilogy of writing, signature and original, the Convention is meant to clarify other incidental elements, two of which seem to us to be more important than the others. First, there is the question of the place and time of receipt and sending of the electronic document (1); and second, there is the recurring debate about the use of automated tools as substitutes for human intervention, at widely differing levels of sophistication (from software making decisions in the place of people to simple forms available on an Internet page) (2). However, we will not go into the question of the quality of an electronic offer in great depth, that being the subject of article 11 of the Convention.[44] This seems to us to be a secondary issue, and in fact is consistent with what the C.C.Q. has always provided on the question, by defining an offer as unequivocal.[45]

2.1 – Place and time of dispatch and receipt of electronic documents

[41] On this point, we can see a fairly strong parallel between the provisions of the Convention and the provisions of the LFIT Act. The only distinctions to note relate to (1) terminological differences involving expressions that are sometimes exact synonyms, and (2) the fact that the Convention refers to the familiar concept of “establishment”, which is of obvious relevance when it comes to international contracts.

[42] First, with respect to vocabulary, the resemblances between the two instruments, and more specifically between article 10 of the Convention and section 31 of the LFIT Act, are striking. The time of dispatch, under the Convention, is

the time when it leaves an information system under the control of the originator … .

The LFIT Act, on the other hand, provides that it may be identified,

where the action required to send it to the active address of the recipient has been accomplished by or on the instructions of the sender, and the transmission cannot be stopped … .

In both cases, we see that loss of control by the sender is the determining factor.

[43] The Convention provides that the time of receipt corresponds to

the time when it becomes capable of being retrieved by the addressee at an electronic address designated by the addressee.

The LFIT Act uses, instead, the expression accessibility, and provides that a document

is presumed received or delivered where it becomes accessible at the address indicated by the recipient as the address where the recipient accepts the receipt of documents from the sender … .

[44] Here again, there are a few minor differences that can be noted, but no conflict arises between the two instruments. First, the Convention is careful to provide for situations in which the recipient’s address is not designated, which the LFIT Act does not formally do. In that case, it is when the recipient “becomes aware” that comprises the time of receipt. Because the LFIT Act provides a presumption of receipt only in the event that the address is designated, it can be “presumed” that the solution will be the same in Quebec law. Second, the LFIT Act establishes a presumption that the document is intelligible, which the Convention does not do. This is a very minor difference, however.

[45] Second, article 10 of the Convention provides for a presumption that both documents received and documents dispatched are attached to the “place of business” of the originator and addressee, respectively. The article also refers to article 6 of the Convention, entitled “Location of the parties”, which specifies what is a place of business in an electronic environment. This is a common concept, regularly used in the law of international contracts, such as the Vienna Convention; however, it was not required in the purely “local” context of the C.C.Q. It is therefore entirely reasonable for the C.C.Q. not to refer to it. Here again, there is no conflict; on the contrary, the Convention supplements what the Quebec law provides, in a purely local context, for the international context.

[46] We would also note that the Convention did not think it useful to revisit the unending question of the place and time of formation of international contracts. This question is already dealt with by the 1980 Vienna Convention,[46] and it may bear repeating that that convention deals with it in a manner that is similar overall to what is provided in the C.C.Q., which also applies the theory of receipt.[47]

2.2 – Automated contract

[47] Most legislation intended to govern electronic commerce is careful to ensure that a judge cannot invalidate a transaction simply because one or both parties has used an electronic agent, as can be done using information technology. The Convention is no exception; it uses the expression “automated message system”, which it defines as follows in article 4(g):

(g) “Automated message system” means a computer program or an electronic or other automated means used to initiate an action or respond to data messages or performances in whole or in part, without review or intervention by a natural person each time an action is initiated or a response is generated by the system; … .

[48] This definition seems to be perfectly compatible with the concept of “pre-programmed document” used in section 35 of LFIT Act, and is even more compatible given that the LFIT Act does not define what that is. Based on the definition in article 4(g), and in a minimum of words, the Convention provides only, in article 12:

A contract formed by the interaction of an automated message system and a natural person, or by the interaction of automated message systems, shall not be denied validity or enforceability on the sole ground that no natural person reviewed or intervened in each of the individual actions carried out by the automated message systems or the resulting contract.

[49] Thus rather than regulating what is done, the rule is that it is possible to form contracts through an electronic agent, leaving aside the debate about the possible risk of legal uncertainty associated with the fact that a “machine” might not have the legal capacity to act – an argument that, to the best of my knowledge, has in fact never been cited by a judge. However, it would have been quite insufficient merely to refer to this element. As well, both the Convention, in article 14,[48] and the LFIT Act, in section 35,[49] draw a line between the obligations of the person we will call the “user” (the person who uses the electronic agent) and the person we will call the “manager” of the electronic agent (the person who created it) – a dividing line in the two instruments which must then be compared, and of which it is then possible to say that, far from being in conflict, the provisions in issue really differ in the details.

[50] The Convention introduces a right to withdraw for the user of the electronic agent where the manager has not established a procedure for correcting errors. Taking a “negative” approach, a manager that has not established such a procedure is penalized. The LFIT Act takes a more “positive” approach, by requiring that there be such a procedure, but the effect is identical: “on pain of non-enforceability of the communication or cancellation of the transaction”. In both cases, the provisions establish a kind of compromise between introducing a measure of legal certainty, to prevent cancellation by the user of the electronic agent on a “pretext”, and the obligation of the manager of tools of this nature to (1) take responsibility by allowing the user to correct any errors and (2) not shift the consequences of the choice of using an electronic agent onto the shoulders of the user. This division of obligations is therefore motivated by “plain common sense” and that is undoubtedly why there is no major distinction between the two sets of legal rules.

[51] On the other hand, and again in terms of application, there are two very slight distinctions to be noted. First, the Convention refers to two cumulative requirements that must be met in order for the user to be able to exercise the right to withdraw: (1) diligently inform the manager of the error and (2) not have received any benefit from the situation. Those requirements are not formally included in the section of the LFIT Act. Nonetheless, I am not certain that they are lacking, in that they are self-evident. Second, in addition to the correction procedure, the LFIT Act requires that (1) instructions for that purpose be given and (2) that users be allowed to do it “promptly”. The first point seems to us to be a consequence of the “positive” approach taken in the LFIT Act and referred to above; the second was intentionally left out of the Convention, thus leaving the question up to individual States. These are thus minor differences that are not likely, in our view, to present major problems.

Next Annual Meeting

2017 Conference

Hotel Saskatchewan

Regina, SK

August 13 - 17, 2017
Creative Commons Licence
This work is licensed under a Creative Commons Attribution 2.5 Canada License
L'usage de cette œuvre est autorisé selon les dispositions de la Licence Creative Commons Attribution 2.5 Canada