Electronic credit contracts and signatures under Quebec Consumer Law

24 July 2019


This article was authored by Nareg Froundjian, a former articling student at Gowling WLG, with the assistance of David B. Kierans.

Can a consumer enter into a valid credit contract online under Quebec consumer law? Spoiler: The answer is yes.

A contract in Quebec is, at its core, an offer by one and acceptation by another consenting party,[1] unless otherwise provided by law.[2] Consent is thus the cornerstone of Quebec contractual law and parties can agree verbally or in writing. At times, the law prescribes formalities such as signature or print requirements for certain types of contracts. In a bid to remain relevant in the technology age, the Quebec legislative framework for information technology[3] broadened the scope of what constitutes a signature and a document.

The signature

Signing a document serves two functions: 1) identifying the signatory party and 2) making their consent explicit.[4] For electronic documents, 3) it also links a person's identity to a given document.[5]

A person's identity can be verified through a personal characteristic (e.g. biometric data), a personal information (e.g. username and password or PIN), a personal object (e.g. chip card, code generator, USB key), or a combination of the aforementioned (e.g. two or multi-factor authentication).[6]

The threshold of acceptable consent to conditions governing a transaction on a website or online service can be met through means as simple as posting a link to the terms in the website footer. Furthermore, clicking "I accept", or some variation thereof, is also sufficient to establish consent.[7]

A link between an identified person and a document can be achieved through a combination of their identity and document metadata,[8] which most websites maintain records of. The ability to demonstrate the preservation of a document's integrity and its link to an individual is essential to a valid signature.[9]

Achieving these three functions allows for almost any type of agreement to be validly executed and binding in a dematerialized environment.

The document

A document is information inscribed on a medium.[10] The Quebec legislative framework for IT encourages a broad interpretation of this notion.[11] However, certain types of contracts could only be created in a specified medium.[12]

Until 2007, consumer credit contracts were one such type.[13] The requirements were as specific as mentioning the weight of the paper[14] and the size of the print.[15] The consumer's signature also had to appear on the last page of the contract and a copy of it had to be sent to the consumer.[16]

Necessary[17] and temporary[18] measures had to be taken to avoid upsetting the carefully crafted balance between consumer protection and business efficacy, giving the legislature enough time to adapt.[19]

It wasn't until 2007 that the regulations were amended to open the door to the use of electronic commerce for contracts of credit. In 2009 the legislature carved out an explicit exception to the paper rule for "distance contracts",[20] which ostensibly cannot be concluded on paper when concluded online.[21]

The legislature had initially prescribed requirements for contracts of credit that went beyond the functional requirements of signatures, likely because paper and manuscript signatures are a deeply rooted cultural formality. While people click "I accept" countless times without ever reading the terms and conditions, signing a name on a dotted line imprints a certain gravitas in the spirit of the party signing. However, it now seems to have accepted a more flexible definition of signature and document.

The Consent

Increasing the level of conscientiousness of those entering into formal agreements can be beneficial for society, but signature and paper fetishism should be tempered by what is really at stake. The true objective of contract law is to ensure that parties enter into agreements with clear and informed consent.[22]

Below are three recommendations to achieve such consent that are helpful in the context of credit agreements, but that can also be used for any type of online contracting:

  1. Provide terms and conditions in plain and concise language, avoiding legalese and avoiding references to external clauses. This helps ensure that people read and understand the agreement they are entering into. Consumer-facing terms are notoriously incomprehensible to the average individual, and often to the average jurist.
  2. Create technical means to verify that a person has truly read terms and conditions before accepting them. You can force the reader to "flip through" pages of a digital contract that is split on multiple pages, or "scroll through" the pages before an "I accept" button becomes active. It is good practice to provide the person with an opportunity to review all the terms on a single page.
  3. Prompt the person to type their password and/or their name in a pop-up before finalizing the transaction. This helps (i) validate identity, thus avoiding unauthorized transactions, (ii) verify consent through an explicit formulation of the person's acceptance, avoiding potential mis-clicks or errors, and (iii) signal the formal nature of the agreement by having the person mimic the formality of a manuscript signature.

These practices will help ensure that consumer contracts are formed in accordance with the necessary degree of solemnity, but also serve to vacate any debate about the quality of the consumer's consent.

Professionals at Gowling WLG (Canada) are happy to be able to provide further clarity about the formation of electronic credit agreements in Quebec and the management of such agreements in a dematerialized environment, throughout their lifecycle. We encourage you to reach out directly to David B. Kierans, a partner at the Montreal office whose practice focuses on various financing and lending issues and who provided valuable guidance for authoring this article.

[1] Civil Code of Québec, CQLR c CCQ-1991, s. 1386.

[2] Ibid, s. 1385.

[3] Namely, the Act to establish a legal framework for information technology, CQLR c C-1.1, or "AELFIT".

[4] Ibid, s. 2827.

[5] Supra, note 3, s. 39.

[7] Dell Computer Corp. v. Union des consommateurs, [2007] 2 SCR 801, 2007 SCC 34 (CanLII), http://canlii.ca/t/1s2f2.

[8] GINGRAS Patrick et François SENÉCAL, « Métadonnées : Plaidoyer pour des mal aimées et des incomprises », (2015) 74 Revue du Barreau 249-306, AELFIT s. 38, also see s. 48 for signature certificates.

[9] Supra, note 3, s. 39.

[10] Supra, note 3, s. 3 and 71.

[11] Supra, note 3, s. 1; Hansard of the Committee on Labour and the Economy, comments from the minister, M. David Cliché, December 7, 2000: « J'ai pensé à Moïse. Lorsque Moïse est descendu de la montagne, il avait un texte sur support de pierre et il avait une signature divine sur un support divin, qui n'est certainement pas un support des technologies de l'information ni un support papier. De ce concept de l'indépendance du support par rapport à la notion de document et de signature est né ce concept... ».

[12] Supra, note 3, s. 2.

[13] Supra, note 3, s. 2 and 101; Consumer Protection Act, CQLR c P-40.1, s. 23.

[14] Règlement d'application de la Loi sur la protection du consommateur, RLRQ c P-40.1, r 3, s. 26. Note that before 2018, this section specified: "The contract must be drawn up on Number 7 Bond paper of a weight of 11.8 kg per thousand 432 mm × 559 mm sheets or on a higher quality paper."

[15] Ibid, s. 28.

[16] Supra, note 13, s. 25 and 28.

[17] Consultations particulières sur le projet de loi n° 161 - Loi concernant le cadre juridique des technologies de l'information, December 7 2000, Ms. Nicole Fontaine of the Office de la protection du consommateur : « Et je ne voudrais pas qu'on pense que, parce qu'on souhaite maintenir le support papier pour quelques contrats, on veut mettre des bâtons dans les roues dans le développement du commerce électronique. Je pense que c'est tout à fait le contraire, mais, bien sûr, comme c'est quand même une pratique commerciale qui est encore à s'implanter, on veut s'assurer que les consommateurs n'en paient pas la note et que ça se fait dans un contexte sécuritaire pour eux, tout en n'étant pas non plus protectionnistes. Alors, nous allons, autant que possible, agir avec célérité pour les travaux à venir ou déjà commencés pour modifier la Loi de la protection du consommateur. », available in French here.

[18] Ibid, « On voit bien que, transposée dans le monde d'aujourd'hui, l'intention était clairement papier, et nous pensons qu'il faut la maintenir encore pendant un temps qu'on souhaite le plus limité possible, dépendamment de ce qu'on va discuter au niveau des balises qui entourent les pratiques commerciales. »

[19] Ibid, « D'abord, je voudrais spécifier que d'ajouter «support papier» à l'article 25 de notre loi fait en sorte que ça conserve ce support pour un temps qu'on pense limité, possiblement un an, le temps qu'on regarde l'ensemble des balises apportées aux pratiques commerciales pour les rendre sécuritaires pour les consommateurs. »

[20] Broad term, meaning "a contract entered into without the merchant and the consumer being in one another's presence and preceded by an offer by the merchant to enter into such a contract.", which can include contracts executed over the phone, internet, or by fax.

[21] An Act to amend the Consumer Protection Act and other legislative provisions, SQ 2009, c 51, http://canlii.ca/t/52mv5, s. 6.

[22] Supra, note 13, s. 9.

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