Electronic Commerce 101. David TS Fraser RELANS April 2010

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1 Electronic Commerce 101 David TS Fraser RELANS April 2010

2 The olden days The common law has been remarkably resilient and able to keep up with the times Person to person contracts Written deeds Contracts by agents Contracts by letter Contracts by telegram Contracts by fax Contracts by ? Contracts by human to computer interaction?

3 The olden days But we ve also had special rules to deal with gaps or problems in the common law, such as the Statute of Frauds

4 Why a standalone statute? To be consistent with international norms Electronic Commerce Act, S.N.S. 2000, c. 26 is based on the Uniform Electronic Commerce Act (UECA) UECA is based on the UNCITRAL Model Law on Electronic Commerce and UNCITRAL Model Law on Electronic Signatures Virtually all provinces have implemented the UECA

5 E-Commerce Legislation Federal and Provincial Governments have stepped in to provide for certainty in electronic transactions Federal: Personal Information Protection and Electronic Documents Act (PIPEDA) Provincial: Electronic Transactions Act or Electronic Commerce Act Implemented in various ways: Do not assume uniformity across provinces.

6 E-Commerce Legislation Generally based on the Uniform Law Conference of Canada s Uniform Electronic Commerce Act. Available at Three parts: Part 1 - Provision and Retention of Information Part 2 - Communication of Electronic Documents Part 3 - Carriage of Goods Based on philosophy of technology neutral electronic equivalence.

7 Philosophy of E-Commerce legislation technology neutrality Recognize that the government is not necessarily in the position to say what particular technology is best. Inappropriate for the government to say that you have to use Microwidget ewallet to have a binding contract. o Old law does not say you have to use Crane brand paper signed with a Parker pen to have a binding contract. It may be OK for the government to say we ll accept documents in the following formats (a), (b), (c), (d).

8 Philosophy of E-Commerce legislation electronic equivalence Statute says that electronic documents are equivalent in law to paper documents. No better, no worse. If you accepted and relied upon document X on paper before, you may accept and rely upon document X in electronic form.

9 Significant exceptions to the rule of equivalence: 2(3)(a) wills and their codicils; (b) trusts created by wills or by codicils to wills; (c) powers of attorney, to the extent that they are in respect of the financial affairs or personal care of an individual; (d) documents that create or transfer interests in land and that require registration to be effective against third parties. Why? Wills, for example, must be signed in a particular manner, must be in a particular form and must be witnessed in a particular way. Very strict rules for formal validity.

10 Part 1: Provision and Retention of Information 5. Information shall not be denied legal effect or enforceability solely by reason that it is in electronic form. This is the governing principle of the Act. 6. Use of electronic information is not mandatory. Consent is required, but may be inferred. 7. A requirement under... law that information be in writing is satisfied by... electronic form if the information is... usable for subsequent reference.

11 Part 1 (cont d) Electronic Signatures Are acceptable as electronic equivalents as long as reliability is addressed. 2(b) "electronic signature" means 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; Provisions for regulations setting out what is reliable. Also, rules for signatures to be provided to the government: must meet information technology standards and requirements as to method and as to reliability of the signature

12 Part 1 - Electronic Signatures (cont d) The Uniform Act does not say how to show who signed an electronic document. Attribution is left to ordinary methods of proof, just as it is for documents on paper. The person who wishes to rely on any signature takes the risk that the signature is invalid, and this rule does not change for an electronic signature. Just because it meets the minimum of the Act does not mean it is robust enough to accept as a signature.

13 Part 2 - Communication of Electronic Documents Does not deal with particular points of law, but clarifies some points of potential uncertainty. Electronic Agents Contract law is based on a meeting of the minds, where the minds are usually human. But in much of electronic commerce, the communication is between human and machine. What is the legal effect?

14 Part 2 - Electronic Agents Section 21 A contract may be formed by the interaction of an electronic agent and a natural person or by the interaction of electronic agents. Normalizes contracts made by interaction of humans and computers and by interaction of computers. Must give the human and opportunity to correct or the contract can be avoided.

15 Part 3 - Carriage of Goods Provides for electronic bills of lading and other shipping documents Perhaps surprisingly, the international shipping industry was one of the first to embrace EDI (Electronic Data Interchange). In shipping, the shipping documents often act as documents of title to the goods in question.

16 You can transfer the title to the goods by transferring the document. Section 25 permits the use of electronic documents for the carriage of goods, if the documents comply with this section. Subsection (2) deals with the electronic functional equivalent of a unique document. (The negotiable document.) If rights are to be given to one particular person, then the electronic document must be in a form that gives reliable assurance that the rights or obligations represented by the document are those of that person and no other. The Act does not say how this might be done, but provides the legal consequences for doing it.

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