Are The Use of Electronic Signatures in Canada Legal?

The use of electronic signatures in Canada is becoming increasingly relevant in carrying out transactions, as businesses and individuals leverage the administrative convenience afforded by today’s digital world. In regards to this commercial veracity, every Canadian jurisdiction (both at the provincial and federal levels) has set up regulations and legislation addressing the use of electronic signatures in Canada.

Federal legislation for eSignatures in Canada

The legislation that falls under the federal level is the Personal Information Protection and Electronic Documents Act (PIPEDA), which was fully implemented in 2004. This statute provides for functional uniformity between paper and electronic documents. It clearly outlines the requirements for a secure electronic signature as follows:

• The e-signature should be unique and distinctive to the person using it;
• The signature is created using methods that the signer can keep under his/her sole control
• The technology used should be able to identify and recognize the person executing the e signature
• Any subsequent change or alterations to the eSignature should be detectable.

Provincial legislation for electronic signatures in Canada

The major focus of the provincial statute is to provide a single, media-acceptable definition of e-signatures. In fact, most of the Canadian provinces have enacted legislation based on the Uniform Electronic Commerce Act (UECA). However, Quebec is one jurisdiction that has opted to diverge with its own set of legislation.

Fundamentally, just like the PIPEDA act, the UECA states that a contract should not be deemed invalid solely because it is in electronic form. This is akin to the United States Standards and it one of the key reasons why citizens in both countries (Canada and U.S.A) can transact business online so easily nowadays.

Below are enactments relating to electronic signatures in different Canadian provinces:

• Electronic Transaction Act (British Columbia)
• Electronic Transactions Act(Alberta)
• Electronic Commerce Act(Ontario)
• Electronic Commerce Act(Prince Edward Island)
• Electronic Commerce Act(Nova Scotia)
• An Act to Establish a Legal Framework for Information Technology(Quebec)
• Electronic Commerce Act(Newfoundland)
• The Electronic Information and Documents Act(Saskatchewan)
• The Electronic Commerce and Information Act(Manitoba)
• Electronic Transactions Act, (New Brunswick)

Basically, the PIPEDA and the UECA outlines a framework for Canadian businesses to use when obtaining secure and legally binding signatures online.

Exceptions and special requirements for Electronic Signatures in Canada

Despite the increasing desire to use electronic signatures, some contracts and documents still call for the use of typical wet-ink signature in order to be deemed enforceable. Such documents include:

• Certain powers of Attorney
• Codicils and wills
• Trusts created out of codicils and wills
• Real estate transfers and other few real estate agreements
• Negotiable instruments
• Some family law documents such as ones related to divorce and adoption
• Some legally required disclosures to consumers
• Various official court documents

Also, there is an enactment governing specific kinds of documents, which normally authorizes or disallows the use of electronic signatures. For instance, promissory notes are handled at the federal level, usually via the Bills of Exchange Act (BEA).

While provinces may have a mandate over persons who issue promissory notes within their respective jurisdictions, there is no act equivalent to the BEA at the provincial level. This means that promissory notes all over Canada are only subject to the federal enactment. The federal statute governing electronic signatures states that a contract requiring a signature is only valid if the legislation guiding it satisfies the requirements specified in schedules 2 or 3 of the PIPEDA Act. And since BEA does not satisfy that, a promissory note cannot be signed electronically.

There are also unique considerations when it comes to how public bodies use electronic signatures. Public bodies such as government departments, agencies, and ministries may have additional rules in regards to the usage of electronic documents. Sometime, they may set their technological standards relating to e-signs. Hence it’s recommended to consult widely before making any transaction.

Forming binding contracts

For Canadian businesses that want to ensure their online contracts are legally binding, the most central element of the UECA is section 20(1). It clearly sets-out that; offers can be made or even received in electronic form (what is now more popularly described as an interactive form). This part of the UECA act is very handy since it gives Canadian businesses the ability and confidence to legally transact businesses online.

Points for consideration

While electronic signatures can be convenient and efficient in regards to daily business activities, there are some key factors that should be taken into consideration. Firstly, though it is not mandatory, it best to obtain the implicit and explicit consent of all interested parties when you wish to use an electronic signature.

Secondly, it is advisable to have a written authorization (maybe via an email) with the parties involved, specifying the different stages where an e-signature can be used. Authorization and consent will help demonstrate the intention of the parties and protect you against accusations of fraud.

Finally, it is imperative to take note that, various documents do not necessarily require a signature to be deemed effective. For that reason, the governing legislation of the contract or document in question must be assessed to determine whether the contract or document really needs a signature and if an electronic signature can be alternatively used in place of a wet-ink signature.

Conclusion

The Canadian landscape is ripe for disruption when it comes to e signature technology. Canada follows the permissive approach. This permissive or minimalist law permits the use of e signatures for nearly all kinds of agreements. E signatures are presumed legally binding unless proof to the contrary is evident. Therefore, it is good to clarify again the importance of getting consent from all the relevant parties prior-to conducting business electronically.

All said and done, in a world where technology is the core focus, e signatures provide a perfect opportunity for efficiency and reliability. More so, digital signature solutions are progressively evolving and equaling the ink in terms of acceptability. Actually, many e signature services go beyond the statutory and legislative requirements. Thus, it is advisable for any modern business based in Canada to take advantage of this advancement in technology.

Sign up now for e-signatures 14 days free trial now!

DISCLAIMER: The information in this Foxit eSign aka eSign Genie blog is for general purposes only and is not meant for companies to use as legal advice. Please confer with your attorney for legal consultation for your location and specific use cases.