Enforceability of e-signatures during COVID-19 pandemic

13 mai 2020 | David Krebs, Jordyn Allan

( Disponible en anglais seulement )

While the COVID-19 pandemic is having an enormous impact on Canadian organizations, including those within the charitable and non-profit sector, they must continue to operate despite the “physical distancing” measures imposed by the government.  This is especially true given that charities and non-profits are seeing an increased need and demand from beneficiaries for support and assistance. As such, organizations are considering how to function online, remotely, or in a manner than respects physical distancing measures.

With this changing way of conducting operations, the enforceability of e-signatures (or electronic signatures) is of specific interest and is the topic of this article.

What qualifies as an “electronic signature”?

Electronic signatures are, generally speaking, equally valid to written  (“wet-ink”) signatures in Canada. That said, there are considerations regarding how to achieve legally acceptable electronic signatures, as well as exceptions to their validity in certain cases.

Laws applicable to electronic signatures are regulated primarily at the provincial level, although federal law may apply in certain specific circumstances and with respect to specific transactions. The provincial legislatures have constitutional authority to regulate property and civil rights within the provinces, which include the authority to prescribe the manner and form of entering into most contractual arrangements. All provinces and territories have passed legislation that addresses electronic signatures in some form or another.  The titles of the legislation vary from province to province and take on some form of either the Electronic Transactions Act, the Electronic Commerce Act or the Electronic Information and Documents Act, with the exception of Quebec where these matters are addressed in the Civil Code of Quebec and in An Act to Establish a Legal Framework for Information Technology.

The definition of the term “electronic signature” is relatively consistent across jurisdictions in Canada, although there can be slight differences. Organizations are encouraged to understand which legislation applies to them and to carefully review the definition to help assess what is acceptable and when.

Unlike some other jurisdictions around the globe and subject to some exceptions noted below, Canada’s laws in this area do not provide detailed guidance on what constitutes an enforceable electronic signature, and the applicable provincial laws are not prescriptive of a certain technology or encryption algorithms that need to exist for a signature to be valid. While silence on these specific matters can provide for significant flexibility, it can also lead to uncertainty as to whether the signature will ultimately be enforceable if it is ever challenged.

Enforceability

Applicable e-commerce legislation is quite uniform across the provinces and territories, although certain nuanced differences exist among them. It is, therefore, advisable to confirm the enforceability of an e-signature with respect to a specific arrangement in that specific context and jurisdiction.

Broadly speaking, Canadian law will permit e-signatures to evidence the formation of a contract and the intention of a party equivalent to that of a wet-ink signature. That said, each province also has certain prescribed exclusions that require original signatures. For example, Alberta’s Electronic Transactions Act does not apply to the following:

  • Wills and codicils;
  • Trusts created by wills or codicils;
  • Enduring powers of attorney and personal directives;
  • Records that create or transfer interests in land, including interests in mines and minerals;
  • Guarantees; and
  • Negotiable instruments.

There are differences from province to province on the types of documents that will require wet-ink signatures, as well as how to manage the associated challenges during the COVID-19 pandemic (see below). Organizations and individuals are well advised to review the particular legislation applicable to the specific circumstances. This will be particularly so for Quebec, which has specific requirements as to which documents must be executed before a Quebec notary.

Further, in order for e-signatures to be valid, most jurisdictions require that there is consent to receive documents in electronic form, either implicit or explicit in some cases. Manitoba’s Electronic Commerce and Information Act (as well as the legislation in most other jurisdictions) states that public bodies, such as governmental institutions, must expressly consent to receiving documents in electronic form (including documents sent with e-signatures).  In other jurisdictions, the legislation does not exempt certain types of documents explicitly or address the issue of consent.  For example, New Brunswick’s Electronic Transactions Act is silent on both issues.

The Personal Information Protection and Electronic Documents Act (“PIPEDA”) contains provisions that are meant to recognize, clarify, and facilitate the use of electronic alternatives, including the use of e-signatures, where federal laws contemplate the use of paper to record or communicate information or transactions. In other words, PIPEDA seeks to put electronic and paper media on an equal footing.  Notably, whether or not your charity or non-profit organization is caught by the provisions of PIPEDA is a separate question as PIPEDA generally applies to information collected during the course of commercial activities.

Corporate Law

When it comes to corporate documentation, charities and non-profits should understand the legal framework that applies to their organization.  Whether a charity or non-profit may execute documents electronically will depend upon the corporate legislation applicable to it, as well as what is contained in its by-laws and whether there are any resolutions that have been passed that address the execution of documents.  Notably, the requirements in an organization’s by-laws can be more restrictive regarding the use electronic signatures than the applicable e-commerce statute, so organizations are well advised to review their by-laws carefully.  For instance, the Canada Not-for-profit Corporations Act (the “CNCA”) expressly provides that information can be created electronically, provided it is not prohibited in the by-laws of the organization. Where a document requires a signature, the CNCA provides that a document can  be signed electronically, provided the signature is unique and can be used to identify the signatory.

As a practical matter, scanned copies of signed documents have a long history of being considered acceptable by Canadian courts. Ultimately, the process for execution boils down to how it can be proven that a signature is authentic and that it has not been altered – ensuring authenticity and integrity. Organizations are encouraged to review the processes and technologies used to ensure that its e-signatures are valid.

Pivoting During the Pandemic

It is important to note that where some jurisdictions may have previously prohibited e-signatures in certain circumstances, emergency legislation has been enacted in some cases to trump the previous laws during the state of emergency. Specifically, in Saskatchewan, the remote signing of Wills is now possible pursuant to an emergency regulation under The Wills Act, 1996. A similar regulation was passed in Ontario under the Emergency Management and Civil Protection Act, permitting Wills and Powers of Attorney to be witnessed via audiovisual communication technology. Along the same lines, the Canada Revenue Agency has allowed for electronic signatures to meet the requirements of the Income Tax Act, given the risks associated with having to attend at an accountant’s office to sign tax returns.

Conclusion

In summary, the statutory framework in Canada is broadly permissive in facilitating electronic signatures. That said, organizations are encouraged to review the relevant authority and their governing documents to confirm the enforceability of e-signatures as it relates to their particular circumstances. We would be pleased to assist your organization in determining the enforceability of electronic signatures within a specific jurisdiction, context and/or type of document.

 

Miller Thomson is closely monitoring the COVID-19 situation to ensure that we provide our clients with appropriate support in this rapidly changing environment. For articles, information updates and firm developments, please visit our COVID-19 Resources page.

Avis de non-responsabilité

Cette publication est fournie à titre informatif uniquement. Elle peut contenir des éléments provenant d'autres sources et nous ne garantissons pas son exactitude. Cette publication n'est ni un avis ni un conseil juridique.

Miller Thomson S.E.N.C.R.L., s.r.l. utilise vos coordonnées dans le but de vous envoyer des communications électroniques portant sur des questions juridiques, des séminaires ou des événements susceptibles de vous intéresser. Si vous avez des questions concernant nos pratiques d'information ou nos obligations en vertu de la Loi canadienne anti-pourriel, veuillez faire parvenir un courriel à privacy@millerthomson.com..

© 2020 Miller Thomson S.E.N.C.R.L., s.r.l. Cette publication peut être reproduite et distribuée intégralement sous réserve qu'aucune modification n'y soit apportée, que ce soit dans sa forme ou son contenu. Toute autre forme de reproduction ou de distribution nécessite le consentement écrit préalable de Miller Thomson S.E.N.C.R.L., s.r.l. qui peut être obtenu en faisant parvenir un courriel à newsletters@millerthomson.com.