Electronic Communications Convention- Impact on common law jurisdictions 2008

II. Introduction and Methodology

[4] The purpose of this Report is to review the Convention in light of existing Canadian law extant in the common law provinces and territories of Canada, and to present findings on the impact the Convention will have on existing law and contractual practices.[8] In assessing the Convention in the context of existing Canadian law, the primary source of law examined was the UECA, which is based on the UNCITRAL model law on electronic commerce. Some provinces and territories have adopted the complete UECA into their legislation governing electronic commerce; others have selectively borrowed from the UECA. Reference in this Report to facets of the UECA will incorporate by implication enacted provincial and territorial legislation, unless differences in such legislation are specifically highlighted.

[5] Some provinces have incorporated particular idiosyncrasies into their electronic commerce legislation; these have not been considered in this analysis unless similar concepts are explicitly reflected in the Convention. Where appropriate, the intersection of the precepts of the Convention with established principles of common law is evaluated.

[6] The fundamental purpose for this comparison is to determine to what extent the Convention, if adopted by Canada, will conflict with established common law norms and existing domestic electronic commerce legislation. Certain differences may be appropriate to the focus and purpose of the Convention. Alternatively, significant variations in approach and wording may result in interpretive anomalies and different legal rules being applied to international and domestic electronic transactions without sound reason.

[7] The focus of the UECA is functional equivalency between paper-based and electronic communications and information, and the establishment of rules relating specifically to contracting in the online environment. The Convention’s specific sphere of application is in connection with the formation or performance of contracts between parties whose places of business are in different States. The Convention does not address many substantive law issues relating to contract formation (such as time and place of acceptance). These issues will require a consideration of domestic contract law principles.

[8] The Convention deals with the relations between parties to an existing or contemplated contract. It does not extend to communications to third parties that have a connection to the contract.  Therefore, the Convention’s scope of application is narrow: only those parties whose places of business are in different countries and who have formed or intend to form contracts fall within its authority. The application of the Convention is further limited by the exclusions listed in Article 2, discussed below.

[9] Because the Convention focuses on international “business to business” relationships, questions may arise as to the determination of such status. Article 1 specifically directs that neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration. Thus, a non-Canadian whose place of business is in Canada would be subject to the Convention. The special nature of “consumer” contracts is addressed as an exclusion in Article 2. The treatment of consumer transactions conforms to the United Nations Convention on Contracts for the International Sale of Goods, which has been adopted as domestic legislation in Canada.[9] Like the latter convention, the Convention places limitations on its application to “consumer” contracts (discussed below).

[10] However, unlike the United Nations Convention on Contracts for the International Sale of Goods, the Convention does not require that both parties to the contract have their places of business in contracting States. The rationale for this position appears to be that if both parties were required to be from contracting States, a court in a contracting State might apply domestic law, different from that of the Convention, to an international electronic contract if the other party’s place of business was in a non-contracting State.[10]

[11] Canada’s domestic electronic commerce legislation differs in some ways from the Convention. However, the substantive domestic law of contract and the rules of private international law may still be applicable in either case. Article 19 would allow Canada to declare that the adopted Convention would apply only to parties whose places of business were in contracting States[11] if, for example, it was felt that the legislative differences between Canada’s domestic law and the Convention necessitated the application of the Convention only to contracting States.  However, the invocation of Article 19 for this purpose would not be necessary because of the substantial similarity between the Convention and Canada’s domestic legislation.

[12] The Convention does not preclude parties from selecting a choice of law in their agreements, and the Convention’s application would be subject to private international law rules.[12] Therefore, if Canada adopts the Convention into its domestic law, and Canada has jurisdiction over an international contract pursuant to application of the private international law rules applied by Canadian courts, the Convention would be applied to the contract as part of the law of Canada. As mentioned above, this would be so even if the other party’s place of business was in a non-contracting State, unless Article 19 was invoked.

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