Most contracts contain clauses that govern both choice of law and venue for resolving disputes. However, there are occasions where questions arise as to where a contract is formed, especially in cases where the personal jurisdiction over a person is in dispute. Many contracts do not address this. The decision of the Supreme Court of Canada in Sinclair v. Venezia Turismo, 2025 SCC 27 , which dealt with the framework for determining personal jurisdiction at common law, confirmed that when a contract is formed using electronic means of communications the usual rule that a contract is formed where the acceptance of the offer is received is where the contract is formed. Côté J, writing for the 5 to 4 majority in the case confirmed earlier decisions stating:
Recall that, in Ontario, a contract is formed based on an offer by one party accepted by the other, or by an exchange of promises, supported by consideration. Put in plainer language, a contract is formed where the last essential act of contract formation occurs. This means, as MacPherson J.A. of the Court of Appeal for Ontario stated, “a contract is formed when and where acceptance is received by the offeror” (Eastern Power Ltd. v. Azienda Comunale Energia & Ambiente (1999), 1999 CanLII 3785 (ON CA), 178 D.L.R. (4th) 409 (Ont. C.A.), at para. 23; see also paras. 27‑29). This point was repeated and cited by our Court in Lapointe: “In Ontario, it is well established that when acceptance of a contract is transmitted instantaneously, acceptance will be considered notified in the place where it is received” (para. 79).
While Eastern Power was a 1999 decision that dealt with the electronic transmission of an acceptance by facsimile, its holding has stood the test of time: where a contract is made by electronic communication, the contract is made in the jurisdiction where the acceptance is received (P. M. Perell and J. W. Morden, The Law of Civil Procedure in Ontario (5th ed. 2024), at ¶2.598).
Jamal J, who wrote the dissenting opinion, agreed with the majority, but also noted that there could be cases where the contract could be considered to be formed in more than one jurisdiction.
As the motion judge explained, this contract was made in Ontario because “[t]he jurisprudence in Ontario establishes that when acceptance of a contract is transmitted electronically and instantaneously, the general rule applies and the contract is made in the jurisdiction where the acceptance is received” (para. 16, citing Eastern Power Ltd. v. Azienda Comunale Energia & Ambiente (1999), 1999 CanLII 3785 (ON CA), 178 D.L.R. (4th) 409 (Ont. C.A.), at paras. 23 and 27-29, and Inukshuk Wireless Partnership, at paras. 25-29). She also noted that in cases of “near instantaneous communications like emails, a contract may be made in two different jurisdictions” (para. 18, citing Inukshuk Wireless Partnership).
The Inukshuk Wireless Partnership v. NextWave Holdco LLC et al, 2013 ONSC 5631 case referred to by Jamal J stated the following:
The general rule of contract law is that a contract is made in the place that the offeror receives notice of the acceptance of the offer from the offeree. See Eastern Power Ltd. v. Azienda Communale Energia and Ambiente, 1999 CanLII 3785 (ON CA), [1999] O.J. No. 3275, 50 B.L.R. (2d) 33 (C.A.), at para. 22. In that case, it was held that the place of acceptance of an offer by return fax was the place where the offeror received notice of the acceptance. For our [page214] purposes, an e-mail is no different than a fax. Both are instantaneous communications.
If a contract is made in the place the acceptance is received, it seems that IWP has a good arguable case that the contract was made in both Montreal and Toronto. If Mr. Colabrese in Toronto had no role to play in this contract other than to be given a copy of the acceptance, it might be argued that the fact he was sent a copy established only a tenuous or weak relationship with Ontario. However, Mr. Colabrese was involved in the negotiations and signed the offer that was sent to 425 and NextWave.
In Eastern Power, Macpherson J.A. did say that the general rule should not be an absolute one. 425 and NextWave contend that the general rule should not be followed in this case because it leads to a situation in which it would be the case that the contract was made in two jurisdictions, which should be avoided. They contend that, rather, the postal rule should be applied, which says that a contract is formed where the acceptance of an offer was mailed by the offeree. That would lead to the contract in this case being made in San Diego.
However, Macpherson J.A. in Eastern Power refused to disregard the general rule and referred to Lord Wilberforce in Brinkibon Ltd. v. Stahag Stahl G.m.b.H., [1983] 2 A.C. 34 (H.L.), who stated that the general rule should be applied in a simple case of instantaneous communication between the parties. Macpherson J.A. stated [at para. 29]:
In my view, the present appeal is also “the simple case.” The acceptance was faxed by the principals of EP in Ontario to the principals of ACEA in Italy. There is nothing to suggest that the communication between these principals was not instantaneous. Hence, applying the general rule, the contract was formed in Italy.
In light of Eastern Power, I do not think it open in this case involving instantaneous e-mail communications to apply some rule other than the general rule that a contract is made in the place that the offeror receives notice of the acceptance of the offer from the offeree, in this case Ontario and Quebec.
What then of the difficulty of saying that a contract was formed in more than one place? Counsel has provided one case from England, Apple Corps Ltd. v. Apple Computer Inc., [2004] EWHC 768 (Ch. Div.). In that case, a contract was negotiated between a lawyer in California and a lawyer in England. The acceptance of the terms took place during a telephone conversation between the two of them. The evidence did not make clear who was the last one to say that the terms were accepted, i.e., whether the notification of the acceptance was received in England or California. Mann J. concluded for the purposes of assuming jurisdiction that the English party had made out a good arguable case that the contract was made in England, and that the English court therefore had jurisdiction.
Mann J. went on, however, to consider whether it could be said that the contract was made in both England and California and on that ground it could be said that there was a good arguable case that England had jurisdiction. He held there was such a good arguable case. In his reasons, he made the following statements regarding simultaneous conversations amongst two or more persons in different locations [at para. 37]:
I confess that I can detect no conceptual barriers to the notion of a contract being treated as having been made in two places, and some not inconsiderable attractions. In a case where the two parties to a contract are not in the same location at the time of contracting, the notion of where the contract is made is essentially a lawyer’s construct. It seldom matters of course, but where it does matter (principally for the purposes of jurisdiction under English law) the law has to provide some answers where an application of the experience of everyday life does not enable one to provide them. Hence the rule in Entores and Brinkibon to the effect that in the case of instantaneous communications (in those cases telex) the contract is made where acceptance is received. . . . However, in the post-Brinkibon world, where oral telephone communications are even more common, and where such communications can involve three or more participants in three or more different jurisdictions, and where parties might even conclude a written contract by each signing, and observing each other signing, over a video-link, the law may have to move on and to recognise that there is nothing inherently wrong or heretical in allowing the notion of a contract made in two (or more) jurisdictions at the same time. This is not merely a way of avoiding an unfortunate, and perhaps difficult, evidential enquiry. It may well reflect the reality of the situation. Take the case of three parties who each agree to complete a written agreement by signing simultaneously over a three way video link — where is that contract made? The natural answer is that it is made in all three jurisdictions. Such a conclusion does not necessarily create practical difficulties. If one of those jurisdictions is England, then one of the foundations for the English courts to assume jurisdiction is present, but it does not necessarily follow that jurisdiction will be assumed, because a Claimant who seeks to sue here would still have to establish that it is the most appropriate jurisdiction in which to sue. Jurisdiction would then be dealt with on the basis of a mature forum conveniens doctrine rather than what might otherwise be a very forced and artificial analysis of trying to establish in which single jurisdiction the contract was made.
The logic of what Mann J. said is compelling. Simultaneous communications can be oral or in written form. The acceptance by and NextWave was sent simultaneously by e-mail to both Montreal and Toronto. There is no logical reason why it cannot be said that the contract was made in both Montreal and in Toronto. There is at least a good arguable case that the contract was made in both Ontario and Montreal, and thus a good arguable case that it was made in Ontario. Thus, in my view, IWP has established a presumptive connecting factor to ground jurisdiction in an Ontario court.
Comment
The Sinclair case did not address the not so infrequent problem of electronic communications not reaching their destination or being trapped by spam filters. This has come up in other cases. However, the case should remind lawyers of the potential benefits of expressly agreeing in contracts where the contract is agreed or is deemed to be made.
