The use of electronic signatures (e-signatures) is becoming increasingly commonplace in commercial transactions, as individuals and businesses capitalize on the administrative efficiency afforded by today’s digital world. In response to this commercial reality, every jurisdiction in Canada (both at the federal and provincial levels) has enacted legislation and regulations (e-commerce legislation) addressing the use of e-signatures. E-commerce legislation sets out guidelines for the form of e-signatures and broadly indicates when e-signatures are acceptable. 

What constitutes an e-signature?

Where a signature is required under provincial law, an e-signature will be treated as functionally equivalent to a handwritten signature. Provincial e-commerce laws do not prescribe any particular form for an e-signature, but define an e-signature as electronic information that a person creates or adopts in order to sign a record and that is attached to, or associated with, the record. In other words, e-signatures are technologically neutral and can be constituted and used in a number of ways, including typing a person’s name, inserting an electronic image of a person’s cursive signature or a code intended to be used as a signature. Quebec legislation however, has an additional requirement that the e-signature be a distinctive mark regularly used to signify the intention of the person who made the mark. 

Under federal legislation, an e-signature is defined more specifically 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. Therefore, the regulation of e-signatures at the federal level is more restrictive than at the provincial level.  

Exceptions and special requirements

Despite the increasing commercial desire to use e-signatures, certain documents and contracts continue to require a personal hand-written signature to be considered enforceable and are specifically excluded in the provincial legislation, namely: (i) wills and codicils; (ii) trusts created by wills or codicils; (iii) powers of attorney to the extent that they are in respect of an individual’s financial affairs or personal care; (iv) documents that create or transfer interests in land and require registration to be effective against third parties, including agreements of purchase and sale; (v) negotiable instruments; and (vi) documents of title, except anything done with a contract for the carriage of goods. 

In addition, there is legislation governing particular types of documents, which specifically authorizes or prohibits the use of e-signatures. For example, promissory notes are governed at the federal level by theBills of Exchange Act (BEA). Although provinces may regulate the conduct of persons who issue promissory notes within a province, there is no provincial equivalent to the BEA, and promissory notes across Canada are subject to the federal legislation. The BEA requires that promissory notes be signed to be effective. Federal legislation governing e-signatures indicates that a document requiring a signature may only be satisfied by an e-signature if the legislation containing the requirement is enumerated in Schedules 2 or 3 of the Personal Information Protection and Electronic Documents Act. As the BEA is not , an e-signature will not satisfy the requirement that a promissory note be signed. 

There are also special considerations when a public body uses e-signatures or when an e-signature is provided to a public body. In particular, public bodies such as government ministries, departments and agencies may control whether they receive electronic documents in electronic form and the government may set technological standards, including with respect to e-signatures.

Points for consideration

While e-signatures can be convenient, effective and efficient in respect of daily business activities, there are certain considerations that should be taken into account. Since e-commerce legislation does not require that a person accept the use of e-signatures, it is best to obtain the explicit or implicit consent of all individuals who are party to the document in question. Furthermore, it is good practice to receive written authorization (typically an e-mail) that an e-signature will be accepted in each specific circumstance.

Consent and authorization will help evidence the authenticity of the e-signature, protect against accusations of fraud and demonstrate the intention of the parties to create a legally binding obligation.

Finally, it is important to note that many documents do not require a signature to be effective. Therefore, the governing legislation of the document in question should be reviewed to determine whether the document requires a signature and then whether an e-signature can be used in place of a manual signature.

Key links

Copies of e-commerce legislation for Canada and each province can be found at the following links: