Electronic communication seems to become more and more pervasive in our personal lives by each passing day. We are now accustomed to purchasing goods and services online, searching and applying for jobs online, dating online, and perhaps we can start separating online.
Most legal agreements are reduced in some form to writing. With some forms of agreements there is legislation that explicitly requires the agreement to be reduced to writing, and signed by parties (such as agreements pursuant to the Family Law Act, or with respect to interests in land, due to the provisions of the Statute of Frauds).. In the past, the reference to the "in writing" requirement would lead one to believe that it is necessary to have a physical hard copy of the agreement, which is signed in ink by the hand of all parties and witnesses. In practice, this is in fact what generally occurs, as copies of the final agreement are couriered back and forth, sometimes along with handwritten modifications and the necessary initials.
However, there may in fact be another option. The Electronic Commerce Act, 2000 ("ECA") is designed to enable greater use of electronic signatures and electronic documents in a variety of contexts. The ECA is based on the UN Model Law on Electronic Commerce, which was adopted in the Uniform Electronic Commerce Act ("UECA") by the Uniform Law Conference of Canada. The preamble sets out the reasoning for such an act nicely:
Legal relationships have long been based on paper documentation. Many rules of law are expressed in language that suits documents on paper. Over the past generation, however, paper has been giving way to computer-generated communications. In the past decade, networked computers and particularly the Internet have accelerated the replacement of paper and spread it into new domains, notably to consumer and domestic transactions.
All provinces have now enacted legislation based on the UECA.
Section 5 of the ECA states the following:
Legal requirement that information or document be in writing
5. A legal requirement that information or a document be in writing is satisfied by information or a document that is in electronic form if it is accessible so as to be usable for subsequent reference. 2000, c. 17, s. 5.
Further, section 11 sets out the following:
Legal requirement that document be signed
11. (1) Subject to subsections (3) and (4), a legal requirement that a document be signed is satisfied by an electronic signature. 2000, c. 17, s. 11 (1).
(2) For greater certainty, subsection (1) also applies to a legal requirement that a document be endorsed. 2000, c. 17, s. 11 (2).
(3) If the document is prescribed for the purposes of this subsection or belongs to a class prescribed for those purposes, the legal requirement is satisfied only if in light of all the circumstances, including any relevant agreement, the purpose for which the document is created and the time the electronic signature is made,
(a) the electronic signature is reliable for the purpose of identifying the person; and
(b) the association of the electronic signature with the relevant electronic document is reliable. 2000, c. 17, s. 11 (3).
(4) If the document is prescribed for the purposes of this subsection or belongs to a class prescribed for those purposes, the legal requirement is satisfied only if,
(a) the electronic signature meets the prescribed requirements, if any, as to method; and
(b) the electronic signature meets the prescribed information technology standards, if any. 2000, c. 17, s. 11 (4).
The ECA itself does not override legislation that explicitly prohibits the use of electronic documents. Section 26 sets out just that as follows:
Preservation of other laws re electronic documents
26. (1) Nothing in this Act limits the operation of any provision of law that expressly authorizes, prohibits or regulates the use of electronic information or electronic documents. 2000, c. 17, s. 26 (1).
Other requirements continue to apply
(2) Nothing in this Act limits the operation of a legal requirement for information to be posted or displayed in a specified manner or for any information or document to be transmitted by a specified method. 2000, c. 17, s. 26 (2).
References to writing or signing
(3) A reference to writing or signing does not in itself constitute a prohibition for the purpose of subsection (1) or a legal requirement for the purpose of subsection (2). 2000, c. 17, s. 26 (3).
There are enumerated documents to which the ECA does not apply. They are set out in section 31:
Documents to which Act does not apply
31. (1) This Act does not apply to the following documents:
1. Wills and codicils.
2. Trusts created by wills or codicils.
3. Powers of attorney, to the extent that they are in respect of an individual’s financial affairs or personal care.
Note: On a day to be named by proclamation of the Lieutenant Governor, paragraph 4 is repealed. (See: 2013, c. 2, Sched. 5, ss. 2, 3)
5. Negotiable instruments.
6. Documents that are prescribed or belong to a prescribed class. 2000, c. 17, s. 31 (1).
Section 31(1)4 used to prohibit electronic signatures in the cases of “Documents, including agreements of purchase and sale, that create or transfer interests in land and require registration to be effective against third parties.” However, this prohibition has been repealed.
Nothing in the act requires a party to accept an electronic signature. In this regard an opposing party could insist upon receipt of an old-fashioned ink signature. Both parties have to be in agreement to use an electronic signature (this is provided by section 3(1)).
The question of course is what is required to make an electronic signature “reliable for the purpose of identifying the person” per section 11(3)? There is no standard set out in the ECA, or in any regulations. In this regard it is up to the person relying on the signatures to decide if they are sufficiently reliable, just as they would with an ink signature. This requires an examination of the surrounding circumstances, and the technology used, if any.
There are services available that facilitate electronic signatures, using encryption to digitally sign documents. This can assist in adding to the indicia of reliability for the party relying on the document. But it’s not technically required. The signature could be as simple as a scanned copy of a person’s regular signature. Again, it’s up to the person relying on the signature to satisfy themselves that whatever method is sufficiently reliable.
Hopefully, with the continued use of technology, and the push towards paperless processes, electronic signatures can become the new everyday standard.
Matthew Harmes is an associate at the law firm of Cobb & Jones LLP. For more articles, visit the Library Page at www.cobbjones.ca