Online Agreements: What does Second Life have in common with the Canadian Wheat Board?


Answer: Forum Selection.  The concept of “forum selection” can be summed up as follows: where 2 parties are entering into a contract and they are located in different jurisdictions (different countries, provinces or states), then they can choose the “forum” or the location where their disputes will be settled. This choice usually covers both law and location – for example, the law of Alberta and the courts located in Calgary. Or the law of B.C. and arbitration in Vancouver. These clauses are also referred to as “mandatory jurisdiction” or “choice of law” clauses. There are subtle differences between them, but generally they all serve the same purpose.  As an online consumer, you may have agreed to be bound by the laws of Washington State (Microsoft), California (Apple) and Ontario (BlackBerry).

In the US, forum selection clauses are respected by the courts: a recent decision (Evans v. Linden Research, Inc., E.D. Pa. Feb. 3, 2011) upheld the provisions of the Second Life online user agreement, confirming California as the proper venue pursuant to the forum selection clause.

In Canada, courts will generally hold the parties to their contract, which includes their choice of law and forum. So these clauses will be upheld, unless there is “strong cause” or convincing evidence to satisfy the court there is a really good reason not to uphold the forum selection clause. Sounds a bit circular – (courts will uphold the clause…unless they won’t) – but this gives Canadian courts the flexibility to weigh the surrounding circumstances. In the recent case of Hudye Farms Inc. V. Canadian Wheat Board, 2011 SKQB 29 (CanLII), an online sign-up process for a Canadian Wheat Board grain-handling contract incorporated certain standard terms. These standard terms specified that disputes would be governed by the courts of Manitoba and the application of Manitoba law.  Although no-one actually signed those terms, the court agreed that they were binding on the parties through a series of agreements and click-through screens.  The clause was upheld, and the lawsuit transferred to Manitoba.

Related Reading: E-Commerce & Internet Jurisdiction

Calgary – 07:00 MST


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