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Court Cases Taming Wild West Web

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Businesses engaged in e-commerce activity and consumers venturing online are frequently concerned with the legal uncertainty created by online contracting and jurisdiction issues.

Businesses need assurance that their online contracts will be enforceable in the same manner as their paper-based ones, while consumers need confidence that their local regulatory framework can be applied to an online seller just as it does to a corner store.

Canadian law is gradually providing answers to these quandaries with e-commerce legislation and consumer protections that create greater certainty for all participants.

Since statutory solutions typically only map out the general confines of the law, it falls to the Canadian courts to fill in the blanks.

Canadian courts have become increasingly active in this regard and two new cases help shed further light on the contracting and jurisdictional issues.

In Canadian Real Estate Association (CREA) v. Sutton Real Estate Services, a recent Quebec decision, the court was faced with a dispute over the access to and use of online real estate listings.

CREA maintains a Web site at that is a clearinghouse for real estate board listings across the country. Sutton is a real estate franchise with 24 agencies employing 1700 agents in Quebec.

The association launched a suit against Sutton after it became aware of the fact that Sutton was taking listings off the site and reposting them on its own site. More troubling, for CREA, was the fact that Sutton was including information on local Sutton agents who were not the listing agents on these listings — creating the prospect for consumer confusion.

CREA sent several cease and desist letters to Sutton demanding that it stop the practice, but Sutton refused, arguing that the listings belonged to the individual agents, not the real estate association.

Meanwhile, in light of Sutton's activities, Remax Quebec, a competitor, threatened to pull its listings from since it did not want them appearing on the Sutton site.

The matter escalated further when the entire Montreal real estate board threatened to withdraw from the site if Sutton's activities continued.

After its letters were ignored, the association turned to technological measures by trying to block Sutton from accessing its site. Sutton quickly became aware of the blocking practice and used alternative means to disguise itself and access the site.

Faced with Sutton's refusal to comply, CREA asked the court to grant an injunction ordering an immediate cessation of Sutton's re-posting of association content. CREA relied on contract law, arguing that its site featured a terms and conditions section which specified that the listings were subject to copyright protection and that they could not be modified or altered in any way. The section further provided that users of the real estate association's site impliedly agreed to the terms by downloading the listings. Sutton responding by noting that it never formally provided its assent to the terms and condition by clicking on an "I agree" icon.

The court rejected Sutton's argument and proceeded to issue the injunction. Although it declined to reach a final decision on the matter, preferring to save that for the formal trial, the court was clearly persuaded that the real estate association was experiencing immediate harm and that it presented a plausible case based on breach of contract. That finding is particularly noteworthy since, much like similar U.S. case law, it indicates that Web site terms and conditions may be enforceable even if they are based only on implied conduct and lack a formal "I agree" assent.

While the Quebec court decision provides assurance on online contractual enforceability, a New Brunswick case illustrates the power of regulators to address online activity that has cross-border impact. Loiselle v. College of Physicians and Surgeons of New Brunswick involved the prescribing and sale of pharmaceuticals online, one of the hottest e-commerce sectors and an important part of the Manitoba economy.

André Loiselle was a physician with licenses to practice medicine in both the United States and Canada. The Manitoba Pharmaceutical Association discovered that Dr. Loiselle was prescribing drugs that were sold through online pharmacies to patients he did not attend. The Association wrote to the College of Physicians and Surgeons of New Brunswick to alert it to the practice, which it believed contravened provincial regulations. The College agreed and quickly suspended Dr. Loiselle's provincial medical licence.

Loiselle challenged the suspension, arguing that the College acted beyond the scope of its jurisdiction. The New Brunswick court sided with the College, interpreting the Medical Act, which governs physician licensing in the province, to permit quick disciplinary action where it believes there is risk of immediate harm. Based on evidence that Dr. Loiselle was prescribing drugs without a patient exam, the court ruled that the College's action was warranted.

The Loiselle decision highlights the fact that the supposedly unregulated "wild west" world of online pharmaceutical sales is in fact capable of traditional regulation. In this instance, an aggressive monitoring program by the Manitoba Pharmaceutical Association led to the suspension of a physician, an occurrence that is likely to repeat itself as regulators seek to establish the same patient protections online as offline.

Although the Canadian Real Estate Association and Loiselle cases do not definitively solve the contractual and jurisdictional challenges created by the Internet and e-commerce, they do provide another two steps forward in the development of Canadian Internet law and they continue the process of providing greater legal certainty to businesses and consumers.

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