Click and Pay

Can the Legislature Keep Up with Mobile Commerce?

Technology often prompts the law to contemplate issues which had previously never been considered, providing new test cases for old concepts. However, as much as one charges forward with the other struggling to keep up, technology is dependent on legislative backing in its courting of public trust. Legislation regarding a nascent technology can offer the imprimatur of governmental awareness and consideration to otherwise unregulated and unconsidered areas of technological innovation.

This has been made patently clear in the years following the surge in mobile technology as new forms of access to information and services have challenged legislators to either develop coherent new legislative frameworks or be left to fit new realities into old models. In the context of mobile technology, mobile commerce, or “m-commerce”, is one such area which has presented challenges to regulation, if only by the sheer speed of its growth and the wide ranging implications of its use.

Given its position at the intersection of contract and consumer protection, m-commerce requires a legislative model which matches the spirit and potential of the technological innovative process while addressing the need for protection of the individual user.

“M-commerce” refers to transactions involving mobile payment methods utilizing a wireless component and which are initiated, processed or confirmed using a mobile device such as a smartphone or tablet. Currently, there are several ways in which a mobile payment can be completed. For example, a payment made through a mobile device can be charged to individuals on their phone bill by their wireless provider for products offered by the wireless provider. Individuals can also use their devices to purchase goods and services from third party suppliers through their financial institution, so long as such third party suppliers have a relationship with the financial institution. Finally, wireless providers can provide services akin to those of a bank by maintaining mobile accounts for customers for deposit and withdrawal. A main account may be maintained by the wireless provider at a financial institution with specific parameters within which the customer may access their mobile account.

As innovative as the permutations of mobile payments are, they still must adhere to basic principles of contract. The United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on Electronic Commerce (the “Model Law”) addresses the difficulty associated with the legal effect or validity of legally significant information communicated through electronic means as follows:

The purpose of the Model Law is to offer national legislators a set of internationally acceptable rules as to how a number of such legal obstacles may be removed, and how a more secure legal environment may be created for what has become known as “electronic commerce”. The principles expressed in the Model Law are also intended to be of use to individual users of electronic commerce in the drafting of some of the contractual solutions that might be needed to overcome the legal obstacles to the increased use of electronic commerce.1    

In Canada, the Model Law was adopted in 1999 by the Uniform Law Conference of Canada in the form of the Uniform Electronic Commerce Act and acts as a model for provincial e-commerce laws. In Ontario, the Electronic Commerce Act, 2000 (“ECA”) governs the formation, use and enforcement of electronic contracts.2 The ECA maintains general contract law principles by stipulating that consent is required for all electronic contracts, although it does provide that consent may be express or implied, with the goal of ensuring that electronic documentation has the same legal effect as paper-based documentation.


An offer, the acceptance of an offer or any other matter that is material to the formation or operation of a contract may be expressed,

(a) by means of electronic information or an electronic document; or

(b) by an act that is intended to result in electronic communication, such as,

(i) touching or clicking on an appropriate icon or other place on a computer screen, or

(ii) speaking. 3

The ECA gives comfort for Ontario on-line contracts that if the contract meets the legal criteria for contract formation, its enforceability under Ontario law will be more certain.

In the context of mobile commerce, consumer protection laws bolster the requirements for enforceable contracts beyond those imposed by contractual law. In Ontario, the Consumer Protection Act, 2002 (the “CPA”) prescribes rules for online transactions where the supplier or consumer is based in Ontario.4 These rules include stipulations such as the requirement of the supplier to provide information to the consumer such as all prices and fees applicable to the transaction, the rights regarding cancellation, returns policies and other salient information.5  The CPA further stipulates that the suppliers must provide the consumer with an express opportunity to accept or decline the agreement and to correct errors immediately before entering into it, failing which the consumer may cancel the agreement.6  Moreover, suppliers may not unilaterally change ongoing consumer contracts without prior consent of the customer.7  Given the size, space and practical limitations of conveying required information on mobile devices, suppliers and customers alike may be vulnerable to claims of unenforceability of agreements entered into on mobile devices.

This disjoint can be rectified by a combination of judicial and technological innovation. The Supreme Court of Canada has held that terms and conditions which included a hyperlink to an arbitration clause were valid and enforceable as this constituted sufficient notice to the customer.8 This provides some instruction to mobile payment developers who need to be aware of the nuance in the display of prescribed information where a misplaced section or page can mean the undoing of a contract.

As further instruction, in the case of “click-wrap” or “click-through” agreements where the terms and conditions of the agreement are posted on the supplier’s website or elsewhere and referred to at the time of purchase, the Ontario Superior Court of Justice has held that such agreements are binding and equivalent to written agreements, despite the fact that all parts of the contract did not appear on the same screen at the same time.9  As such, binding mobile agreements should take the form of click-wrap contracts where customers must scroll through to reach a consent button at the bottom.

Law is not the enemy of technology by any means. The Canadian courts and legislature have moved to keep pace with the changing demands of the electronic marketplace by allowing for innovation while respecting fundamental principles of contract and consumer protection. The key lesson for lawyers and mobile developers is to be aware that new laws and the judicial treatment thereof are based on both backward and forward-looking thinking. Mobile payment user policies should contemplate was has been accepted in the past and extend the principles from that point onwards. As with developing technologies, the new builds on the old.

1 UNCITRAL Model Law on Electronic Commerce at p. 16, online:

2 S.O. 2000, c. 17.

3 Ibid at s. 19(1).

4 S.O. 2002, c. 30.

5 Consumer Protection Act, 2002, O. Reg. 17/05, s. 32.

6 S.O. 2002, c. 30, s. 38(2).

7 Ibid, s. 40(1).

8 Dell Computer Corp. v. Union des consommateurs, [2007] 2 S.C.R. 801, 2007 SCC 34.

9 Rudder v. Microsoft Corp. [1999] O.J. No. 3778 (Sup. Ct. J.).

The content of this article is intended to provide general information for the reader and is not intended as advice or an opinion to be relied upon in relation to any particular circumstance. For specific applications of the law to a particular set of circumstances, the reader should seek professional advice.

By Samuel H. Carsley

Samuel H. Carsley practices in the areas of corporate and securities law with McLean & Kerr LLP, a law firm based in Toronto.