Driven by advances in electronic commerce ("e-commerce"), parties have, with greater frequency, been utilizing electronic contracts to effect commercial transactions. E-commerce legislation, such as the Electronic Commerce Act (Ontario)1 and the common law have evolved to reflect this commercial reality giving parties greater assurance that agreements signed and delivered by fax or PDF should be considered legally enforceable in the same way as conventional originally executed agreements.
While e-commerce legislation does not require that parties transact electronically,2 parties that choose to create electronic contracts can use technological media such as fax or PDF.3 These types of media meet provincial statutory requirements as their "read-only" nature allows the recipient to retain the contract for subsequent reference in a format that preserves the integrity of the document from the time it was created. Both fax and PDF enable the recipient to either store the contract electronically or print and store it in hard copy for future evidentiary reference.4
It is notable that electronic signatures may also be employed.5 Provincial legal requirements for a signed contract are satisfied provided that an electronic signature is created or adopted by the signatory in a form that is reliable for identifying such person and the electronic signature is within, attached to or associated with the document.6 An identifiable personal signature includes the typewritten name of the signatory which may be included at the end of an agreement or communication.7 The font or format of an electronic signature is not of general concern provided the signatory intends to be bound by the markings that constitute the electronic signature.
Presently, certain documents are specifically excluded from the ambit of provincial e-commerce legislation and accordingly electronic transmission should not be relied on exclusively. Some documents that are excluded are wills, codicils, negotiable instruments and, in some jurisdictions, documents that transfer interests in land and require registration to be effective against third parties. Subject to the consent of the parties, documents which may be signed electronically include credit agreements, security agreements and most other documents related to typical financings that are not required to be filed or registered in original form. It is important to note that a party is never obligated to use, provide or accept information or a document in electronic form. It is exclusively a matter of consent.
Federally, e-commerce is governed by the Personal Information Protection and Electronic Documents Act (Canada).8 However, electronic transmission of most federally governed documents must still be in written and signed form, including those governed by the Bank Act (Canada)9 and the Bills of Exchange Act (Canada).10 Therefore promissory notes, cheques and bankers’ acceptances should not be signed electronically and an electronic version should not be relied on.
Although electronic transactions are becoming more common, the parties should still indicate their intention to use and be bound by such electronic communications by including a provision in the agreement that the agreement may be executed and delivered by fax or PDF.