Ontario Court: “fax transmission” rule applies to email contract formation

 

[25] The general rule of contract law is that a contract is made in the place that the offeror receives notice of the acceptance of the offer from the offeree. See Eastern Power Ltd. v. Azienda Communale Energia and Ambiente 1999 CanLII 3785 (ON CA), (1999), 50 B.L.R. (2d) 33 (Ont. C.A.) at para 22. In that case it was held that the place of acceptance of an offer by return fax was the place where the offeror received notice of the acceptance. For our purposes, an e-mail is no different than a fax. Both are instantaneous communications.Inukshuk Wireless Partnership v. NextWave Holdco LLC et al,2013 ONSC 5631 (CanLII), (Ont. S.C.J.) per Newbould J.  [emphasis added]

The court’s adoption of the “functional equivalence” approach reflects  The UNCITRAL Model Law on Electronic Commerce, 1996 (with additional article 5 bis as adopted in 1998)Resolution adopted by the General Assembly [on the report of the Sixth Committee (A/51/628)] 51/162 Model Law on Electronic Commerce adopted by the United Nations Commission on International Trade Law. [“Model Law”] (see Guide to Enactment, Articles 15-18).

It would have been useful for the court to have mentioned the Electronic Commerce Act, 2000, SO 2000, c 17, which adopts the Model Law in Ontario, and, in particular, the applicable contract formation provisions as follows:

Electronic Transactions and Electronic Agents

Formation and operation of electronic contracts

19. (1) An offer, the acceptance of an offer or any other matter that is material to the formation or operation of a contract may be expressed,

(a) by means of electronic information or an electronic document; or

(b) by an act that is intended to result in electronic communication, such as,

(i) touching or clicking on an appropriate icon or other place on a computer screen, or

(ii) speaking. 2000, c. 17, s. 19 (1).

Contracting out

(2) Subsection (1) applies unless the parties agree otherwise. 2000, c. 17, s. 19 (2).

Legal recognition of electronic contracts

(3) A contract is not invalid or unenforceable by reason only of being in electronic form. 2000, c. 17, s. 19 (3).

Involvement of electronic agents

20. A contract may be formed by the interaction of an electronic agent and an individual or by the interaction of electronic agents. 2000, c. 17, s. 20.

Errors, transactions with electronic agents

21. An electronic transaction between an individual and another person’s electronic agent is not enforceable by the other person if,

(a) the individual makes a material error in electronic information or an electronic document used in the transaction;

(b) the electronic agent does not give the individual an opportunity to prevent or correct the error;

(c) on becoming aware of the error, the individual promptly notifies the other person; and

(d) in a case where consideration is received as a result of the error, the individual,

(i) returns or destroys the consideration in accordance with the other person’s instructions or, if there are no instructions, deals with the consideration in a reasonable manner, and

(ii) does not benefit materially by receiving the consideration. 2000, c. 17, s. 21.

Time of sending of electronic information or document

22. (1) Electronic information or an electronic document is sent when it enters an information system outside the sender’s control or, if the sender and the addressee use the same information system, when it becomes capable of being retrieved and processed by the addressee. 2000, c. 17, s. 22 (1).

Contracting out

(2) Subsection (1) applies unless the parties agree otherwise. 2000, c. 17, s. 22 (2).

Presumption, time of receipt

(3) Electronic information or an electronic document is presumed to be received by the addressee,

(a) if the addressee has designated or uses an information system for the purpose of receiving information or documents of the type sent, when it enters that information system and becomes capable of being retrieved and processed by the addressee; or

(b) if the addressee has not designated or does not use an information system for the purpose of receiving information or documents of the type sent, when the addressee becomes aware of the information or document in the addressee’s information system and it becomes capable of being retrieved and processed by the addressee. 2000, c. 17, s. 22 (3).

Places of sending and receipt

(4) Electronic information or an electronic document is deemed to be sent from the sender’s place of business and received at the addressee’s place of business. 2000, c. 17, s. 22 (4).

Contracting out

(5) Subsection (4) applies unless the parties agree otherwise. 2000, c. 17, s. 22 (5).

Place of business

(6) If the sender or the addressee has more than one place of business, the place of business for the purposes of subsection (4) is the one with the closest relationship to the underlying transaction to which the electronic information or document relates or, if there is no underlying transaction, the person’s principal place of business. 2000, c. 17, s. 22 (6).

Habitual residence

(7) If the sender or the addressee does not have a place of business, the person’s place of habitual residence is deemed to be the place of business for the purposes of subsection (4). 2000, c. 17, s. 22 (7).

 

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