Electronic Signatures - A Necessary Tool During the Pandemic but Are They Binding?
The COVID-19 pandemic has led to a new era of how we work, with many of us working from home. Meetings are being done virtually, tasks are submitted online and of course, legal documents are signed electronically. With many companies now carrying on their business online, concerns are raised about the use of electronic signatures on documents and agreements. Are electronic signatures legal in Canada?
On the federal level, an electronic signature is permitted by the Personal Information Protection and Electronic Documents Act (PIPEDA) while the provinces have enacted their own legislation in accordance with the Uniform Electronic Commerce Act (UECA)–with the exception of Quebec.
In Ontario, the use of electronic signatures is regulated by the Ontario Electronic Commerce Act (the "ECA") which defines an electronic signature as “electronic information that a person creates or adopts in order to sign a document and that is in, attached to or associated with the document.” Therefore, in Ontario, an e-signature can have the same legal effect as a "wet-ink" signature that is signed by hand. The e-signature must, however, be reliable for the purpose of identifying the person signing and the relevant electronic document must also be reliable (see Section 11(3) of the ECA). There are many programs available from leading technology companies that can help to ensure that both the signature and the documents are "reliable", including locking documents to ensure they can't be modified once submitted for signature, and collecting an audit trail for electronic execution by multiple parties.
Although this is good news for general contractual agreements, there are some documents that are currently excluded under the ECA. These documents include:
Wills and codicils
Trusts created by wills or codicils
Powers of attorney pertaining to finances or personal care
Negotiable instruments such as promissory notes or cheques
And documents of title, to some extent.
What these general carveouts from the ECA mean, is that the laws applicable to these documents would govern the validity requirements.
Recently, there have been some amendments to statutes in Ontario to allow for more use of electronic signatures. One such amendment is Bill 190, COVID-19 Response and Reforms to Modernize Ontario Act, 2020 which enacted the Alternative Filing Methods for Business Act. The provisions under this Act apply to business corporations and allow for e-signatures of application and supporting documents. You can read more about this information here.
On August 1, 2020, the Commissioners for Taking Affidavits Act 2020 was also amended to permit remote administering of oaths through video conferencing software, which has been a very practical, necessary change to permit businesses to continue to operate and to permit real estate transactions to continue in a nearly seamless fashion.
Although it looks like working from home will continue, at least in the short term, it is comforting to know that the current constraints on businesses do not hinder the validity of documents being signed electronically and businesses are able to continue their operations in a way that works for both businesses and customers.
For any questions or advice regarding the use of electronic signatures in your business, or other general corporate commercial matters, please don’t hesitate to contact Northview Law at 416-639-7639, or follow this link to book a free consultation.