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McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
30) Which of the following practices should be adopted in order to respect the consumer
protection principles advocated by Industry Canada?
a. sending unsolicited email only to parties who you think will be interested
b. sharing customer information only with trusted business partners
c. providing the information necessary for customers to make informed choices
d. implementing electronic payment systems
e. selling private information about your customers to anyone who will pay for that
information
31) The case of Rudder v Microsoft dealt with the creation of online contracts. The judge
held that
a. consumers cannot be held liable for terms that they did not actually read.
b. parts of a document that cannot be seen on the screen when the document is first opened
are the electronic equivalent of small print.
c. an electronic contract does not become effective until the consumer is provided with a
paper copy of the agreement.
d. when Canadian consumers become involved in disputes regarding online contracts, they
are always entitled to have their claims heard in Canadian courts.
e. Merely clicking the “I Agree” prompt on an Internet contract can be sufficient to bind a
party to all contractual terms, including onerous and unusual terms.
32) Which of the following propositions is best supported by the decision in Zhu v Merrill
Lynch HSBC?
a. Customers are entitled to rely on the common sense meaning of a website's online
prompts when completing a transaction.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
b. Customers are NOT entitled to rely on the common sense meaning of a website's online
prompts when completing a transaction.
c. Customers cannot rely on keystroke errors to cancel a transaction when that transaction
involves the purchase or sale of stocks.
d. Companies owe customers the same duty to make online transactions readily
understandable, regardless of whether the customer might risk losing large amounts of
money as a result of a faulty transaction.
e. It is the customer's responsibility to confirm the prompts received during online
transactions.
33) Canadian and provincial privacy laws can be said to reduce the risk of identity theft.
Which of the following statements is an example of how privacy laws might accomplish
this task?
a. by denying business the right to ever disclose personal information
b. by encouraging businesses to track customer purchases so they can identify any
purchases that seem out of character and might therefore be fraudulent
c. by requiring businesses to destroy personal information that is no longer neededb
d. by requiring businesses to run criminal record checks on all employees
e. by requiring businesses to store personal information only in paper form and not
electronically
34) When it comes into force, Canada’s Anti-Spam Legislation, S.C. 2010, c. 23
a. creates an automatic jail term of 14 years for anyone caught sending spam.
b. requires that companies eliminate the possibility of keystroke errors in online
transactions.
c. allows individuals to put their names on a Do Not Call List to avoid telemarketers.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
d. gives individuals the ability to sue spammers for the actual cost of each occurrence of
spam, up to $1 million per day.
e. create a criminal prohibition against identity theft.
35) Kamil created an electronic contract with Rogers Cable Inc. That contract contained a
paragraph that purported to allow the company to change the terms of the agreement by (i)
sending a letter through the mail to Kamil, (ii) sending an email to Kamil, or (iii) posting a
notice of the changes on its website. Which of the following statements is TRUE?
a. Regardless of the precise wording of the paragraph, Rogers cannot change the terms of
the agreement unless it ensures that Kamil actually became aware of the change.
b. As long as Kamil agreed to the terms of the contract as a whole, he will certainly be
bound by every term in that contract, even if he did not actually read the entire document.
c. Regardless of the precise wording of the paragraph, Rogers can vary the terms of its
agreement with Kamil only if it acts in a way that would satisfy the reasonable person.
d. Rogers can rely on the paragraph as long as it took reasonable steps to draw Kamil's
attention to it before the contract was created.
e. Because of the risk that companies may take advantage of consumers, Rogers must
provide Kamil with a hard copy of a letter that explains the changes to the agreement.
36) Cordelia intended to purchase 10 copies of a book from an online book dealer. She
intended to keep one copy for herself, and give the others to her students as end-of-term
gifts. By mistake, however, she actually placed an order for "100," rather than "10," books.
She realized her error only when she received an enormous shipment of books. She now
wants to avoid the consequences of her mistake. Which of the following statements is
TRUE under most Canadian statutes that deal with electronic commerce?
a. Cordelia must pay for all 100 copies of the book unless she can prove that the book
dealer immediately realized that a mistake had been made.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
b. Cordelia will be entitled to relief only if she proves that she had committed a reasonable
mistake and that she had not been careless when she placed her order.
c. Cordelia is automatically entitled to relief if the book dealer's website did not
immediately ask her to confirm the number of books that she wanted to purchase.
d. Cordelia is entitled to relief only if, among other things, she notified the book dealer of
her error as soon as possible after realizing she had made a mistake.
e. Cordelia cannot possibly avoid the consequences of her own mistake.
37) David Stanley has created a new company that will manufacture beverage containers.
He intends to call his company Stanley Cup Inc. He also intends to conduct business online.
He therefore wants to use the domain name www.stanleycup.ca. Which of the following
statements is TRUE?
a. Because "Stanley Cup" accurately describes David's name and business, he has an
absolute right to use that domain name.
b. The use of that domain name will be regulated by an organization known as CIRA.
c. Although there are several statutes that regulate the actual practice of online commerce,
there are no special rules regulating the use of domain names, and as a result, any disputes
arising from David's use of that domain name will be resolved on the basis of traditional
intellectual property laws.
d. If anyone objects to David's good faith use of that domain name, the case will certainly
be resolved through ADR.
e. David can use any name he wants as long as some else has not already taken the Internet
domain name.
38) A government official has recently appointed you to a committee. That committee has
been asked to consider possible changes to UECA. Which of the following statements is
TRUE?
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
a. The government in question must be the federal government.
b. UECA was created by the United Nations.
c. UECA is the name of a statute that applies across Canada.
d. UECA requires commercial organizations of a certain size to collect customer
information.
e. UECA formed the basis for most Canadian statutes that deal with online transactions.
39) Miki wants to set up some kind of automated marketing to advertise her latest jewellery
line. She is also wary of annoying her customers or breaking the law with her marketing.
Which of the following strategies should she adopt?
a. sending an automated telephone message to every name in the phone book
b. sending an email to everyone on her business contact list which happens to be a very
long list
c. sending an email to her regular customers, and requesting that they forward her email to
10 friends, who can forward it to 10 more friends, and so on
d. comparing her list of customer phone numbers, which she gathered with permission to
use for business-related phone calls, against the national Do Not Call List (DNCL) and
sending a telephone message to those names that do not appear on DNCL
e. hiring a telemarketer to call every name in the phone book so that she can avoid liability
all together
40) A company has recently begun to provide online services to consumers. In order to
protect itself from the risk of liability and in order to improve the quality of its services, the
company has asked you, as an online consumer protection expert, to provide advice on best
practices. Which of the following is TRUE?
a. The company is legally obligated to comply with the minimum standards established in
the Canadian Code for Consumer Protection in Electronic Commerce.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
b. The Canadian Code for Consumer Protection in Electronic Commerce is a federal
statute.
c. The company should offer services in only one language in order to avoid the risk of
confusion.
d. With the exception of the territories, every Canadian jurisdiction has adopted its own
version of PIPEDA.
e. The company should voluntarily and strictly comply with all of the standards in the
Canadian Code for Consumer Protection in Electronic Commerce, and even seek to exceed
those standards with the objectives of protecting privacy and ensuring that consumers are
treated fairly, honestly, and transparently.
Essay Questions
1) "The Model Law on Electronic Commerce is not really a law." Is this statement true?
Explain your answer.
2) Briefly explain how Canada's Uniform Electronic Commerce Act (UECA) emerged.
What role does it play in online contract formation?
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
3) Upon graduation from college, Martine decided to go into the information business. His
first venture was a fee-based daily electronic newsletter for online stock traders. Given the
time-sensitive nature of the information, Martine's terms of use promised to deliver the
newsletter every business day, no later than 9:00 am Eastern Standard Time (EST). The
newsletter was doing fairly well until one day at 8:42 am EST, Martine spilled Orange
Crush on his notebook computer right as he clicked to send the newsletter to the subscriber
list. After Martine experienced a hardware malfunction and lost a key piece of software and
a portion of his address list, the newsletter was sent to some subscribers but not all.
Because Martine's service was down for the rest of the day, those who didn't receive the
newsletter right when it was sent, never did receive the news that day. Martine had no way
to determine who received and who did not receive the newsletter. Consequently, several
day traders demanded a refund for services not rendered, while others decided to seek
damages for lost opportunities. Martine is seeking your advice. Outline the issues involved
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
in this case and advise Martine on how he can prevent future disputes, given the nature of
his business.
4) Many businesses presume that electronic messages that have been sent will be received.
Briefly discuss how businesses can proactively prevent the problems that would arise if a
message were lost in cyberspace.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
5) Explain the principle of network neutrality using a business example. Why do some
Internet companies, academics, and public interest advocates support this principle? Does
any Canadian legislation address network neutrality?
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
6) You recently received a notice that your Internet service provider has released your
personal account information to a third party in connection with a defamation complaint.
When you call to contest the service provider's actions, you are referred to a provision in
the terms of use agreement that you apparently did not read (or, at least, you did not
remember reading it!). The relevant provision gives permission to release personal
information under such circumstances. Can the service provider rely on the provision?
Explain your reasoning, using the precedent set out in Rudder v Microsoft.
7) Monkey Business Inc has implemented an automated software system that allows its
employees to enter their weekly hours. Recently, it was determined that one if its
employees made a keystroke error and was underpaid as a result. As a general rule, how
can Monkey Business and its employees protect themselves against keystroke errors?
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
8) What is the significance of Time magazine's choice for "Person of the Year" for 2006?
What does this choice signify for electronic commerce?
9) You have just started a new business selling jewel-encrusted dog collars over the
Internet. Your website allows customers to place orders online, which they pay for by credit
card. The collars are then shipped straight to their homes. The website is almost ready to be
launched, the last thing you want to add to the site is your privacy policy. Briefly explain
three provisions that you might wish to include in your privacy policy, and why a privacy
policy is important for your business.
10) Identity theft is a major concern for businesses and customers alike. Briefly explain
why identity theft can be harmful to a business and provide three examples of how a
business might reduce the risk of identity theft.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
11) You are the owner of Bread and Butter, a catering service that accepts customer orders
through its website. You have recently discovered that your company's domain name,
breadandbutter.ca, was registered by a company called Domain Acquisitions Co during a
lapse in your registration (due to an overlooked outstanding payment). This company has
since offered to resell the domain name to your company for a considerable sum. Needless
to say you are extremely perturbed. What are your possible courses of action? Decide
which remedy you will seek and outline your strategy.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
12) Given the uncertainty involved in determining a company's potential liability in foreign
jurisdictions, are there any proactive steps that a company might take to protect itself?
Explain your answer and provide examples.
13) You are a manager at a medium-sized start-up company that is well positioned in the
online intermediary market. One of your colleagues has asked you to offer some advice
about the liability of online intermediaries. Provide a brief introduction to this issue.
Illustrate your answer with business law examples. How can a business shield itself from
intermediary liability?
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
14) Identify and briefly explain the provisions of the Canadian Code of Practice for
Consumer Protection in Electronic Commerce that deal with advertising communications
and potential customers.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
15) What are the advantages and disadvantages of a decision by your business to
implement Industry Canada's Principles of Consumer Protection in Electronic Commerce?
Explain your answer.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 19: Electronic Commerce
