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Comments on the CMC draft Template for Internet Sales Contract Harmonization

Draft Internet Sales Contract Harmonization Template: Comments to CMC

Note that the document being commented on can be seen at http://strategis.ic.gc.ca/SSG/ca01642e.html


We note that this harmonization template is limited to rules regarding information disclosure, contract formation, cancellation and reimbursement rights. Other issues that should be addressed in the context of Internet sales to consumers include:

  • liability and consumer rights to redress in the event of unauthorized online transactions (e.g., where the supplier fails to authenticate the identity of the purchaser);
  • liability in the event of failures in security mechanisms (e.g., theft of electronic signature)
  • validity of subsequent electronic notices (e.g., regarding a service purchased online) which were not actually received by the consumer (e.g., because Internet access has been discontinued or interrupted)

In each of these cases, consumers need protection. Specifically, they need protection from liability where the supplier failed to properly authenticate the identity of the purchaser, where an authentication or other security mechanism failed due to no fault on the consumer’s part, and where an electronic notice was never actually received by the consumer, regardless of the provisions of any sales contract.

In respect of authentication, it is important to recognize that businesses have access to information about electronic commerce-enabling technologies and the ability to limit and plan for the risks created by electronic commerce. Consumers, in contrast, have neither the access to information nor the expertise necessary to evaluate the reliability of a given technology. Moreover, unless fraud and error losses associated with online transaction technologies (and not attributable to carelessness on the part of the consumer) are allocated to technology providers and online vendors, there will be little incentive for investment in the further improvement of authentication technologies.

Information Disclosure

Para.4(1)(a) sets out key information that should be disclosed to consumers prior to the transaction, so that the consumer can make an informed decision as to whether or not to purchase. We agree that the information listed here is essential information that must be conveniently disclosed to the consumer before the transaction is entered into, and which is capable of being conveniently retained and printed by the consumer. If disclosures are not made in a manner that is convenient for the consumer, they are not meaningful disclosures.

We note that it is unclear whether 4(1)(a)(iv) includes “quantity purchased”. Confirmation of quantity ordered is important, given the likelihood of keystroke error in electronic transactions. We suggest making the requirement to disclose “quantity ordered” explicit in para.4(1)(a).

Para.4(1)(b) requires that this information be “located on one webpage…” and “made accessible on the Internet in a manner that ensures that the information is capable of being retained and printed by the consumer”. In comparison, the Alberta Electronic Sales Contract Regulation requires that a similar list of information be provided in “a form of electronic sales contract” that is either sent to the consumer via e-mail or “made accessible to the consumer on the Internet in a manner that ensures that the form is capable of being retained or printed by the consumer” (para.4 of Alberta Electronic Sales Contract Regulation).

We agree that the information listed in para.4(1)(a) should be included in any sales contract, and should therefore be provided to the consumer in a single form, so that the consumer need not print off several separate webpages, for example, in order to obtain a paper copy of the contract and all relevant info. (e.g.,supplier name and address) for future reference. Online consumers should be able to access all relevant contractual information in one place. It is important to note in this respect that an online consumer may not be able to access the online vendor’s website at a future date, and therefore needs to be able to retain all of this information at the time of the transaction.

The fact that some of the information set out in para.4(1)(a) is standard information that should be provided up front to all consumers visiting the site (e.g., supplier name, address, contact info., general restrictions on sales, general return policies) does not change the need for it to be incorporated into each contract of sale as well, for the reasons stated above. The only exception to this may be general “cancellation, return, exchange and refund policies” that do not apply to the transaction in question. For greater clarity, para.4(1)(a)(x), should be explicitly limited to those policies applicable to the transaction in question.

If, nevertheless, it is determined that return policies, for example, need not be incorporated into a single form or webpage, the template should require that such information be prominently disclosed on the supplier’s website, and that it be subject to the remaining rules in para.4(2).

Cancellation Rights

We support the approach to cancellation rights set out in paras.6 – 11. However, one potential problem area has not been addressed: consumer cancellation rights in the event of mistake (e.g., keystroke error) not noticed until after the contract was accepted. Presumably, the drafters intend that the rule requiring order confirmation (Para.4(1)(b)) will operate to prevent such problems from occurring. However, the reality in online contracting is that clicking and keystroke errors are easily made. For example, online vendors often highlight a given response (e.g., “I agree”), such that an unwitting consumer can engage the response by simply hitting the return key. Consumers who are interrupted or rushed can easily make such errors, and even confirm them, without noticing until it is too late.

In such cases, the cancellation right set out in para.6(1)(a)(ii) will not necessarily apply; the problem is not lack of opportunity to accept or decline the contract, but rather potential for keystroke/clicking error. In order to address this additional problem, consumers should have the right to cancel the contract within a certain time period (e.g., one hour) of inadvertently making it.

We also question how the rules would apply to oral cancellations (e.g., by telephone). Para.8(3) specifies that cancellation may be given “by any means, including but not limited to personal service, registered mail, courier, facsimile, and e-mail.” (The same provision appears in para.12(4).) Telephone is not listed, but nor is it excluded, implying that oral cancellations can be effective, but raising the questions: Why was telephone (a method likely to be used by consumers) not mentioned in the list of possible methods? What kind of evidence is needed to prove an oral cancellation?

Credit Card Chargebacks

Credit cards are the prevalent form of payment in online transactions. The credit card payment system offers an efficient mechanism for consumer redress in the event of inadequate disclosure and/or order confirmation process by an online vendor. Indeed, in the absence of a credit card chargeback, the consumer who exercises her right to cancellation under para.6 may well be unable to secure a refund from the vendor. In most cases, the cost of litigation to enforce one’s right to a refund vastly outweighs the value of the refund, hence many aggrieved consumers never obtain redress despite their statutory rights.

The availability of the credit card chargeback mechanism to provide consumer redress in such circumstances should be better exploited than it currently is by government agencies tasked with consumer protection. In this respect, we note that statutory rights to credit card chargebacks do exist in other jurisdictions, and that Canadian consumers deserve to be similarly protected. We therefore strongly support the inclusion of para.12, requiring credit card companies to reverse charges in cases where online merchants have failed to comply with their obligations under this regulation.


Para.3 of the draft Template notes that “Work is ongoing by the Committee concerning the issue of jurisdiction.”

This is an issue of great significance for electronic commerce, and one that PIAC has been working on through the Hague Conference and other fora. Work is underway by the Hague Conference on an international Convention (“Convention on Jurisdiction and Foreign Judgements in Civil and Commercial Matters”) dealing with this issue. The current draft of that Convention reflects the Brussels Convention rule (applicable to European countries) that consumers should always have the right to sue and be sued in their home courts regarding purchases that they made while in their home jurisdiction.

PIAC strongly supports the application of such a rule throughout Canada, as well as internationally. So-called “choice of forum” clauses in consumer contracts involve no real choice by the consumer. Rather, they are imposed on consumers in standard form, non-negotiable contracts. No one realistically expects consumers in the course of ordinary commerce to read or appreciate such clauses at the time of purchase. Hence, it is unfair to enforce such clauses against consumers in the event of a dispute. Consumers should always have recourse to their home courts for redress with regard to contracts that they entered into from their home jurisdiction.

Some businesses argue that such a rule will impede electronic commerce, since they will have to limit the jurisdictions in which they do business to those in which they are comfortable being subject to litigation. This is an appropriate result, in our view. Where a trade-off has to be made between increased commercial opportunity and improved access to justice, the latter should prevail. More consumer choice is of course desirable, but not at the cost of redress. Businesses can and should limit their consumer sales to those jurisdictions in which they are comfortable being subject to litigation by consumers.

We therefore urge the CMC to adopt a harmonized approach to jurisdiction in cross-border consumer litigation that reflects this well-established principle of fairness and justice.



Philippa Lawson
Public Interest Advocacy Centre
1204 – 1 Nicholas St.
Ottawa, Ontario K1N 7B7
tel: (613) 562-4002 x.24
fax: (613) 562-0007
email: pippa@web.ca


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