We are witness to the rise in the "information" or "knowledge based" business. As companies and industries have emerged based entirely on information and knowledge, the legal community has increasingly been called upon to find ways to protect that information. The courts in Canada have responded by finding that information is "confidential in nature", thus restricting the right to commercially exploit. The Province of Ontario has now enacted the Electronic Commerce Act. The intent of the Act is to provide a coherent set of rules when information in electronic form is exchanged. The Act does not prescribe the use of technology, but rather provides a set of rules when information is exchanged entirely in electronic form.

     The Act is enabling. If the parties do not consent to an electronic agreement, then the Act does not apply. While it may be possible to infer consent from the conduct of the parties, businesses should be prepared for the argument that the consumer did not consent to the electronic agreement.

     The Act contains a limited error correction mechanism, which is not present in its American counterparts. A transaction between an individual and an electronic agent is voidable if an important mistake is made and there is no opportunity to amend or correct the error. Accordingly, businesses should ensure that consumers are afforded ample opportunity to correct potential mistakes.

     The Act provides that the electronic format will be functionally equivalent to an original document in many circumstances. For example, the legal requirement for a signature will be obviated by the use of an electronic signature. It is expected that regulations will be made pursuant to the Act to prescribe a specific set of rules governing the reliability of electronic signatures. Similarly, the requirement to retain a document can be satisfied if it is retained in its electronic form if the accuracy and integrity of the original can be ensured. This is another area where it is expected that regulations will provide additional rules on how the integrity of the information can be preserved.

     The Act specifies rules for establishing when and where contracts are deemed to be sent and received. An electronic document is received when it is capable of being retrieved and processed by the recipient. Actual receipt is not material. Businesses operating from Ontario should be aware that the rules do not necessary correspond in other jurisdictions, including the United States of America. It is imperative, particularly in the business to business context, that the parties address contract formation and the proposed jurisdiction for enforcement.

     In many respects, the Act is simply a recognition of the rapidly evolving electronic marketplace. Businesses carrying on business electronically must take note of the salient provisions of the Act and where applicable, should amend their electronic forms to bring themselves within the ambit of the Act.