Although Ontario is currently taking steps to gradually re-open the economy, it is expected that physical and social distancing measures will remain in effect for the foreseeable future (or at least until a vaccine is developed).
If legal professionals, companies and individuals were not already using electronic signatures to conduct business prior to COVID-19, this may be an opportune time to consider switching from in-person signing and delivery of paper documents to remote signing of electronic documents. Electronic signatures are recognized as legally binding, provided certain requirements are met, and can be a more convenient and cost-efficient way to conduct business. Electronic signature software such as DocuSign and Adobe Sign are popular.
In Ontario, the Electronic Commerce Act, 2000, S.O. 2000, c. 17 (the “Act”) governs the use and legal validity of electronic signatures. The Act expressly provides that a legal requirement that a document be signed or endorsed is satisfied by an electronic signature. An “electronic signature” is defined 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”.
We provide the following tips and considerations for the use of electronic signatures in Ontario:
1. Legal Requirement for Signature: The Act only applies to documents that are legally required to be signed. Contracts, for example, may be formed verbally and do not require a signature. Other written documents may not legally require a signature although the parties are free to sign if they choose to do so. We suggest that you determine whether the document legally requires a signature prior to carrying out the requirements for an electronic signature.
2. Consent: A person’s consent must be obtained to use, provide or accept an electronic signature. Consent may be inferred by the person’s conduct if there are reasonable grounds to believe that the consent is genuine and related to the electronic signature, but it is best practice to obtain written consent prior to conducting business electronically in order to avoid any issues over the legal validity of an electronic signature.
3. Intention: In determining whether an electronic signature is legally binding, the key consideration is the signatory’s intention to agree to, and be bound to, the document. Best practices include using signing cues and deliberate language at the appropriate locations in the document.
4. Substance Over Form: Although digitized representations of the handwritten signature are often used, the electronic signature does not have to be an exact replica of the handwritten signature. The electronic signature can be any “electronic information” adopted by the signatory to signify his or her intention to sign the document. It can take any form. For example, the typed name at the end of an email or clicking “I accept” on a website can be sufficient.
5. Reliable Association: There must be a reliable association between the signatory and the electronic signature, and between the electronic document and the electronic signature. Best practices include confirming the identity of the signatory prior to signing, requesting the electronic signature through their uniquely identified email address, and using electronic signature software that embeds an electronic audit trail within the document.
6. Document Storage and Retention: The electronic document must: (a) be retained in the format in which it was created, sent or received; (b) be accessible so as to be usable for subsequent reference by any person who is entitled to access the document; and (c) have identifiable information related to its origin and destination, and the date and time when it was sent or received.
7. Exceptions: Certain documents cannot be signed by electronic signatures, for public policy reasons, and still require handwritten or “wet” signatures. In Ontario, these documents include wills and codicils, trusts created by wills or codicils, powers of attorney, negotiable instruments and documents of title (except contracts for carriage of goods).
8. Provincial or Federal: While most documents are governed by provincial legislation (such as the Act), there are some documents that are governed by federal legislation such as PIPEDA and different requirements and standards may apply for electronic signatures.
If you have a legal issue arising during or because of COVID-19 / Coronavirus, please contact us for an initial consultation through our Request Consultation Form, email to email@example.com or by telephone (416) 979-2020.