The Covid-19 pandemic has caused a marked increase in people conducting business transactions partially or entirely by electronic means. This includes the use of electronic signatures and electronic exchange of documents. Even as we emerge from the pandemic, the efficiency presented by electronic signing and exchange of documents means this trend is likely to continue. As a result, many people wish to learn more about the validity of electronic signatures.
Existing Legal Framework
Ontario’s Electronic Commerce Act, 2000, S.O. 2000, c. 17 (ECA) provides a statutory framework for the use of electronic signatures. In particular, the ECA generally provides that electronic documents and signatures have the same legal effect as paper contracts and signatures. Most other Canadian provinces and territories have adopted similar legislation.
The ECA broadly defines 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”. Practically, an electronic signature can take many forms, including:
- Digital signatures through platforms such as DocuSign and Adobe Sign,
- A scanned hand-written signature on an electronic document,
- Using a stylus on a tablet touchscreen to write a signature by hand,
- A typed name or signature block on an email, and
- User authentication to access a website, coupled with a mouse click on some form of acknowledgement to capture intent.
The ECA includes the following key terms with respect to the use of electronic signatures:
- A person is not required to accept an electronic signature if that person does not consent to the use of electronic documentation. (Section 3)
- An electronic signature is the functional equivalent of an original signature (Section 11(1)).
- Unless parties otherwise agree, an offer, acceptance of an offer and any other matter that is material to the formation of a contract may be expressed by means of an electronic document, electronic information, or an act that is intended to result in electronic communication, such as touching or clicking on an appropriate icon or other place on a computer screen (Section 19(1) and (2))
- Electronic documents are the functional equivalent of paper documents (Section 5);
- The ECA does not apply to the following document types:
- Wills and codicils;
- Trusts created by wills or codicils;
- Powers of attorney;
- Negotiable instruments; and
- Documents of title (other than in connection to contracts for the carriage of goods)
(Section 31(1) and (2)).
The fact that the ECA does not apply to these document types does not necessarily mean that a “wet ink” signature is required. Rather, common law rules and legislative provisions specifically governing these types of documents would need to be considered to determine the validity of electronic signatures in such circumstances.
Ontario Bill 190
In response to the Covid-19 pandemic, Ontario passed Bill 190, the COVID-19 Response and Reforms to Modernize Ontario Act, 2020, S.O. 2020, c.7, which enacts a new statute, the Alternative Filing Methods for Business Act, 2020, LO 2020, c 7, sch 1 (AFMA). The AFMA provides businesses and corporations more flexibility under certain business statutes by allowing alternative methods of document filing, permitting the use of electronic signatures and permitting the filing of electronic copies instead of originals. The Ontario business statutes that have been permanently amended by the AFMA are:
- Business Corporations Act, R.S.O. 1990, c. B.16 (OBCA).
- Business Names Act, R.S.O. 1990, c. B.17 (BNA).
- Co-operative Corporations Act, R.S.O. 1990, c. C.35 (CCA).
- Corporations Information Act, R.S.O. 1990, c. C.39 (CIA).
- Corporations Act, R.S.O. 1990, c. C.38 (CA).
- Limited Partnerships Act, R.S.O. 1990, c. L.16 (LPA).
- Extra-Provincial Corporations Act, R.S.O. 1990, c. E.27 (EPCA).
Aside from the few exceptions listed in the ECA section 31, above, the statutory framework in Ontario is broadly permissive of the use of electronic signatures. Further, Ontario has implemented additional permanent changes to make legislative compliance easier for Ontario businesses. While the use of electronic signatures has been permitted in Ontario for some time, the widespread adoption of electronic means of conducting transactions may be unlikely to subside and may only increase going forward.
Ben Hopkins is an associate in the Business Law group at Perley-Robertson, Hill & McDougall. His practice involves general corporate/commercial law matters.