August 20, 2007

The Supreme Court of Canada recently dismissed a class action suit against Dell launched in Quebec. The case has some useful observations about e-commerce.

The issue arose from Dell's mistaken posting of incorrect low prices on its website. Dell refused to honour those prices.

The case turned on the enforceability of Dell's terms and conditions and in particular a section that said consumers had to use arbitration rather than class actions. The decision is now academic in some provinces, such as Ontario and Quebec, which have recently enacted legislation to make terms that deny consumer resort to class proceedings unenforceable.

Despite that and despite the case being decided under the Quebec civil code, the court made some observations that bode well for e-commerce in general.

Click wrap agreements -- where one clicks "I agree" to be bound by an agreement -- are binding, but there has been some question whether terms found on links on a page are binding on users.

Part of the case hinged on whether linked documents formed part of the main web pages. The court stated that: "The evidence . . . shows that the consumer could access the page of Dell's website containing the arbitration clause directly by clicking on the highlighted hyperlink entitled Terms and Conditions of Sale. This link reappeared on every page the consumer accessed. When the consumer clicked on the link, a page containing the terms and conditions of sale, including the arbitration clause, appeared on the screen . . . (The) clause was no more difficult for the consumer to access than would have been the case had he or she been given a paper copy of the entire contract on which the terms and conditions of sale appeared on the back of the first page."

The dissent had a similar point of view, saying, "We are dealing with a different means of doing business than has heretofore been generally considered by the courts, with terminology and concepts that may not easily, though nevertheless must be, fit within the existing body of contract law . . "(As) e-commerce increasingly gains a greater foothold within our society, courts must be mindful of advancing the goal of commercial certainty . . . (The) context demands that a certain level of computer competence be attributed to those who choose to engage in e-commerce.

"It is true . . . that the hyperlink to the Terms and Conditions of Sale was in smaller print, located at the bottom of the Configurator Page. The evidence was that Dell places a hyperlink to its Terms and Conditions of Sale at the bottom of every shopping page on its site.

"This is consistent with industry standards. In fact, this is the placement that was at the time recommended by Industry Canada's Office of Consumer Affairs (Your Internet Business: Earning Consumer Trust -- A Guide to Consumer Protection for On-line Merchants (1999), at page 10).

"It is proper to assume, then, that consumers that were engaging in e-commerce at the time would have expected to find a company's terms and conditions at the bottom of the web page."