E-Commerce Contract and Evidence Legal Issues

AuthorGeorge Takach
ProfessionAdjunct Professor
For the past few hundred years, paper-based documents — in the form
of contracts, purchase orders, invoices, and bills of lading — have been
the predominant means to record and share commercial information.
With the advent of the telegraph 150 years ago, for the first time com-
mercial information was communicated electronically without paper.
The telex and fax continued this trend, as did direct computer-to-com-
puter communications, often referred to as electronic data interchange
(EDI), an important means for transmitting commercial information in
certain industries. Today, the Internet is poised to become a very
important means of doing business electronically, both in the context
of the one-on-one transactions of early electronic communications, as
well as in the online environment of many-on-many.1As well, data are
1 In this chapter, the term electronic commerce will be considered to encompass a
broad range of previous and current technologies, though today its primary
focus is on business being done by means of fax, telephone, e-mail, and the
Internet. See chapter 1, section C.3, “Mass Customization,” for a discussion of
Internet-based electronic commerce. In one of its reports on the online world,
the Canadian government has defined electronic commerce as follows: “Elec-
tronic commerce, which is at the heart of the information economy, is the con-
duct of commercial activities and transactions by means of computer-based
information and communications technologies. It generally involves the process-
ing and transmission of digitized information”: Government of Canada (Task
Force on Electronic Commerce, Industry Canada), A Cryptography Policy Frame-
work for Electronic Commerce: Building Canada’s Information Economy and Society
chapter 6
today stored electronically; even previously paper-based documents are
scanned and their contents stored electronically through imaging sys-
tems to save money and to improve access through indexing and
retrieval systems. This shift from a paper-based to an electronic-based
environment raises numerous legal issues related to contract forma-
tion,2evidence law, records retention, and e-mail. This is not surpris-
ing given that the four dynamics of computer law, namely, the rapid
rate of technological change, the elusive nature of information, and the
blurring of private/public and national/international, are very much in
evidence vis-à-vis doing business electronically.3The legal system has
had several hundred years to craft rules, through statutes as well as
judge-made common law, to address the risks and problems presented
by paper. By contrast, electronic-based communications systems, from
the telegraph to the Internet, have presented the subdisciplines of con-
tract and evidence/records retention law with novel and sometimes dif-
ficult hurdles. Nevertheless, through sensible judge-made law, and
more recently by means of legislated law reform, the legal rules relat-
ing to electronic commerce are becoming more certain, with the ulti-
mate goal of making them as predictable as those applicable to doing
business with paper-based information; indeed, in case after case,
judges are concluding that electronic communications and record-
keeping practices offer greater, not less, certainty and trustworthiness
516 COmputer Law
(Ottawa: Industry Canada, 1998), available at [Cryp-
tography Policy Framework]. Electronic commerce refers to business arrange-
ments effected through electronic instead of paper-based mechanisms.
2 Contract formation issues are particularly important given that, as John Gregory
notes in “Solving Legal Issues in Electronic Commerce” (1999) 32 C.B.L.J. 84 at
86 [“Solving Legal Issues”], “Electronic commerce rests largely on the law of
contract.” Mr. Gregory, who is with Ontario’s Ministry of the Attorney General,
is the prime architect of Ontario’s recent law reform initiatives in the electronic
commerce area. This article by Mr. Gregory provides a wide-ranging survey of
the “areas of uncertainty” related to electronic commerce (involving contracts,
electronic devices, shrinkwrap licences, webwrap and clickwrap licences, nego-
tiable instruments, electronic payment systems, jurisdiction, and intellectual
property); various statutory barriers including evidence law and writing require-
ment impediments; and the means to promote electronic commerce, including
enhanced signatures, licensing information, consumer protection, privacy, and
dispute resolution. Usefully, Gregory divides his analysis by those measures
intended to remove barriers to doing business electronically, and those that
actively promote e-business.
3 These dynamics are important, and are a unifying theme throughout this book.
For a discussion of these dynamics, see chapter 8, section A, “Computer Law:
than their paper-based predecessors. The new legal rules related to the
electronic business environment, however, are not self-applying; that
is, when designing and implementing electronic commerce delivery
systems, significant care and attention must be expended in order to
achieve online legal relationships that are effective and enforceable.
Contracts are agreements that give rise to obligations the law will
enforce.4Contract law facilitates the efficient operation of markets by
establishing rules for concluding contracts and making payment under
them. To this end, contract law has developed a number of principles
and doctrines intended to promote certainty among business people in
their commercial relations.5In particular, the law has promulgated sev-
eral rules related to the formation of contracts, addressing such ques-
tions as what formalities need to be observed, and when and where
contracts arise. With respect to contracts and other commercial docu-
ments that are paper-based, these rules are quite elaborate and well
developed, as might be expected from a body of law that has matured
over several hundred years. Since the advent of the telegraph, commer-
cial relations effected through electronic means have presented the law
with a number of challenges, primarily because of the first and second
dynamics of computer law; that is, courts have been confronted by tech-
nologies that have obviated the need for paper, and once free of a paper-
based medium, judges have had to contend with the truly ephemeral
nature of information. Generally, however, by focusing on the policy
objectives intended to be achieved by contract law rules related to writ-
ing and signature (for example, the core functional purpose of writing
E-Commerce Contract and Evidence Legal Issues 517
4 Joseph Chitty, Chitty on Contracts, 28th ed. (London: Sweet & Maxwell, 1999)
para. 1-001. Another renowned commentator conceptualizes contracts in terms
of private legal obligations that effect economic exchange: P.S. Atiyah, An Intro-
duction to the Law of Contract, 5th ed. (Oxford: Clarendon Press, 1995).
5 Professor Lon Fuller, in his classic article “Consideration and Form” (1941) 41
Colum. L. Rev. 799, conceptualizes these as the “channelling function” of con-
tracts, essentially the use of certain rules to ensure transactors know when they
have a contract. Fuller’s other two important functions are “evidentiary” (in
effect, having a record of the transaction so that transactors can recall with pre-
cision what they agreed to), and “cautionary” (in essence, the contracting
process serves as a warning that legally binding commitments are being made
resulting in obligations that will need to be discharged).

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT