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Electronic Signatures in the COVID-Age

Author(s): James R. Brown, Jacqueline Code, John M. Valley, Constantine Troulis

Apr 9, 2020

For further information on the changes below, please contact one of the authors above or any member of our Corporate Governance Group.

There has been a marked increase in the use of electronic signatures in corporate, commercial and consumer transactions in recent years. This trend has accelerated with much of the world currently sequestered and working from home, with the prospect of such restrictions remaining in place for at least the near term. As a result, people are now even more actively looking at ways to continue carrying on business despite the technological and other constraints they now face working remotely. This includes looking to electronic methods to sign and exchange contracts and documents in lieu of signing on paper. Many people are also seeking more information about the validity and reliability of electronic signatures and how to practically and securely execute documents and agreements without a physically-signed “wet ink” page.

Helpfully, the statutory framework in Canada is broadly permissive in facilitating the use of electronic signatures. As a result, electronic signatures can generally be used in a variety of documents and records, including contracts and other commercial documents. Courts across Canada have generally been supportive of the use of electronic signatures. With limited exceptions, electronic signatures (in a variety of forms) have been found to have the same validity as “wet ink” signatures. Given the current crisis, many governments, regulators and courts have urgently adapted their practices and indicated their intention to provide more flexibility in their approach to the use of electronic signatures. While a number of these measures have been implemented only on a temporary basis (for example, the changes in Ontario to the swearing of affidavits and the execution of wills and powers of attorney), the hope is that the crisis will act as a catalyst in creating more permanent advances in the use of technology to execute documents more generally, including documents that have traditionally been viewed as incapable of electronic execution.

Set out below are some that can help guide a business in determining the best policy for both electronic creation and execution of documents, including the use of electronic signatures. Having a clear policy on the use of electronic signatures is critical to mitigating potential risks of using electronic signatures and ensuring that the electronic signature will serve as an effective replacement for a “wet ink” signature, both at the time of signing and in future, if a dispute arises.

More detailed information relating to electronic signatures is available by following these links to our discussion of:

  • , including:
    • general considerations
    • in respect of contractual arrangements or negotiable instruments (including promissory notes)
    • additional considerations in the corporate law context
    • developments relating to affidavits and attestations
    • other electronic signature considerations

Conclusion

The COVID-19 pandemic is causing many people to urgently consider ways and means to continue carrying on business. Moving away from “wet ink” execution of documents and instruments to a more adaptable environment is an important measure as millions of people are suddenly found working from home, where traditional concepts of document execution and delivery are more challenged. Osler would be happy to provide specific advice regarding the use of electronic signature or electronic records for particular types of documents and to assist in identifying best practices and appropriate policies and procedures for your organization.

 

[1] PIPEDA defines an electronic signature as “a signature that consists of one or more letters, characters, numbers or other symbols in digital form incorporated in, attached to or associated with an electronic document.”

[2] For example, PIPEDA requires signatures to satisfy the following criteria in order to be considered “secure electronic signatures”: (a) the electronic signature must be unique to the person signing; (b) the signature must be created and be under the full control of the person making the signature; (c) specific technology or processes must have the capability to be used to identify the person; and (d) there must be an audit trail, meaning the electronic signature must be linked with an electronic document in a way that allows the examiner to determine whether the e-document has been changed since the signature was attached to it. Although these requirements are more prescriptive than those contained in provincial legislation, and can be referred to as useful guides to best practices, PIPEDA itself only applies to a narrow range of documents. However, similar language finds its way into other federal statutes – such as the Canada Business Corporations Act.

[3] Note, however, that some governments are taking actions to permit technological substitutes in the face of the COVID-19 pandemic. For example, on April 7, 2020, the Ontario government has issued a regulation under the Emergency Management and Civil Protection Act confirming that, for the duration of the emergency, statutory requirements for the execution of wills and powers of attorney requiring witnesses to be present in person may be satisfied by means of “audio-visual communication technology” (i.e. a virtual meeting) provided that at least one person who is providing services as a witness is a licensee under the Law Society Act.

[4] A signature is the affixing by a person, to a writing, of his name or a mark distinctive to him which he regularly uses to signify his consent.

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