The Era of Electronic Contract

The Era of Electronic Contract

By Miakim Gervais-Henripin and Frédérique Lissoir

The electronic contract (or eContract) is an agreement written and signed in electronic format, without using the traditional pen and paper or physical copies.

More and more, we conclude electronic contracts without even realizing it. For instance, the “Terms and conditions” that we check without reading when downloading a software happen to be an intellectual property contract that we pledge to respect. Furthermore, online purchase websites such as “Amazon” or any other online virtual transactions are contracts from the moment there is an exchange of consents between the buyer and the seller.  

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Legal weight of the eContract

One might wonder what legal weight an eContract carries and what level of proof is required to establish the existence of such a contract. 

First, it is important to specify that according to the principle of technological neutrality, the contract has the same probative value, whether in writing or electronically. Same goes for the signature. What is special with the electronic format is that it needs a mechanism to guarantee the identity of the signatories as well as the document’s integrity, which can prove more difficult electronically than on paper.      

So, the document’s integrity is proven when we can verify that it has not been altered and that it was kept in its entirety. Furthermore, the used medium must be stable and offer enough sustainability during the entire life cycle of the document.[1] In a court of law, this integrity is presumed and the burden of proof will befall the adversary who claims otherwise.[2]

In the case Tabet v. Equityfeed Corportion, the plaintiff claims that he concluded a contract with the defendant who breached certain terms. According to the former, the contract was available online on the Equityfeed website. To give his consent, he had to click on a button. He entered his name electronically on the contract, saved a copy on his hard drive and printed a physical copy. However, the defendant denies the existence of such a contract. Considering the dubious statements and the lack of sufficient proof at trial, the request has been rejected.

As for motives of rejection, the plaintiff has not proven the existence of an email exchange concerning the contract. He could not prove that his computer was broken either, that the URL address of the contract was the same as that of the defendant’s website, that a valid signature had willingly linked the parties or that real prejudices had occurred.[3]

So, even if in the eyes of law, an electronic contract is as valid as a written one, it is essential to establish its proof, which can turn out to be more difficult than with a written contract because of the ephemeral, variable, modifiable nature of the data and its storing.  

 

The Act to Establish a Legal Framework for Information Technology

The Act to Establish a Legal Framework for Information Technology (hereafter the Act) made the usage and validity of electronic contracts and signatures official in 2001.

For starters, the law defines the notion of document as any information inscribed on a medium. As long as this information is structured and intelligible, it can be found on any medium or technology. When the medium is a technology, it will be qualified as technology-based documents, such as information on floppy disks, CD-ROM, hard drives, networks, clouds, etc.[4]

This law also elaborates on the notion of functional equivalence and interchangeability. Subject to the law and any requirement of a specific medium, it is possible to use any medium and technology in compliance with the law. These information media are interchangeable and even if the law requires a document in writing, it does not have the obligation to be inscribed on a specific medium or technology.[5]

As for the signature, the law specifies that it can be affixed to a document by any means or process in compliance with the law. So, the signature is valid as long as the integrity of the technology-based document to which it is affixed is also guaranteed.[6] Moreover, if the law allows a signature to be printed, engraved, lithographed or otherwise affixed by a mechanical or automatic process, we must interpret it as allowing the use of a signature other than handwritten.[7]

But who says law, says exception! To this effect, certain contracts and written documents must be inscribed on a paper document as provided by law. Some examples are issuance of cheques and will drafting.[8]

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On International Level 

In 1999, the Parlement and the Council of the European Union adopted a directive that defines a common framework for electronical signatures.[9] The directive’s objective was to facilitate the legal recognition of these signatures.

As for the United States courts, they confirmed time and time again that the eContracts met the legal requirements in terms of contracts.[10] To that effect, the Uniform Electronic Transactions Act regulates electronic transactions. To be probative, these electronical signatures are valid if they show the intent of the signatory to be linked to a contract and if they guarantee the signatory’s accurate identity. If the law requires that a person gives, sends or delivers information in writing, the obligation will be met if the information given, sent or delivered electronically is able to be kept by the recipient at the time of its receipt through backup, impression or conservation in any other way. Otherwise, the provisions of the Uniform Act will not find application. The same goes if it is not possible to retrieve the information or the document at a later date, on the servers or otherwise.[11] Thus, it is the case of a person who signs an email or an employee who signs a delivery authorized by his employer. For notarized documents, the notary must be present in the room with the signatory because it is his duty to ensure the accurate identity of the signatory and swear in his documents. It is however possible to sign documents electronically as long as the legal requirements are met. In that case, the electronic notarized document will bear as much weight as the paper version.[12]

Also, in France, a party can make information electronically available to another party on an electronic medium such as a website.[13] According to their Civil Code, the electronic sales contract is formed remotely under three conditions: First, the terms and conditions must be made available for the consumer or client so he may give his knowing consent. Second, a first click must allow the possibility to verify the order, correct any mistakes or withdraw. Third, a second click must allow to confirm the order, which is when the contract will be validly formed between the parties. If there is no possibility to correct any possible mistakes, the contract may be declared void.[14]

Finally, an example in Canada would be the Union des artistes (Artists’ Union) that increasingly uses eContracts. This type of contract and signature through email bear the same legal value as a printed contract signed by hand.[15]

 

In brief

So, according to the law and the jurisprudence here and elsewhere, an electronic contract has value. Nowadays, it has become easy to conclude all types of online contracts. More and more, merchants and businesses offer products or services through an online platform, whether it is their website or high-traffic sites like “Facebook”. In the technology era, the business world is transforming at breakneck speed and consumers must adapt consequently. In any case, it is recommended to remain as vigilant, whether it be a paper contract or his virtual counterpart.  

 

PDF Version: The Era of Electronic Contract

 

[1] Loi concernant le cadre juridique des technologies de l’information, RLRQ, chap. C-1.1, art. 6.

[2] MARSEILLE, Claude. “Commerce électronique: La nouvelle loi québécoise sur le commerce électronique”, Fasken Martineau DuMoulin s.r.l., Juillet 2002, 31 août 2017.   

[3] DAM, Amy et LAROSE, François. «Evidence of an electronic contract requires at the least a demonstration of its integrity », Lexology, Bereskin & Parr LLP, 21 août 2017, 31 août 2017.

[4] Loi concernant le cadre juridique des technologies de l’information, RLRQ, chap. C-1.1, art. 3.

[5] Préc. note 2, art. 2 et 9.

[6] Préc. note 2, art. 39.

[7] Préc. note 2, art. 75.

[8] MARSEILLE, Claude. “Commerce électronique: La nouvelle loi québécoise sur le commerce électronique”, Fasken Martineau DuMoulin s.r.l., Juillet 2002, 31 août 2017.   

[9] BALASSOUPRAMANIANE, Indragandhi, http://www.barreau.qc.ca/pdf/journal/vol32/no6/surlenet.html, Volume 32, No 6, 1er avril 2000, 9 septembre 2017.

[10] Technology Lawyers, « Electronic Contracts and the Law », http://www.technologylawyers.com/resources/technology-law/internet-law/electronic-contracts-and-law.htm.

[11] Plimpton, Laura, « The Law of Contracting Electronically », https://www.entrepreneur.com/article/189660, 9 septembre 2017.

[12] Idem.

[13] Bandrac, Monique et Guenin, Frédérique, « Contrats sous forme électronique », http://www.doctrine-juridique.com/contrat-sous-forme-electronique.php, 9 septembre 2017.

[14] DAM, Amy et LAROSE, François. «Evidence of an electronic contract requires at the least a demonstration of its integrity », Lexology, Bereskin & Parr LLP, 21 août 2017, 31 août 2017.

[15] Union des artistes, “Contrat électronique : questions et réponses », https://uda.ca/services-et-outils/contrats-electroniques-questions-et-reponses, 9 septembre 2017.