The scale and pace of change in our increasingly-connected digital and electronic world has been too much for even a stodgy area like the law to ignore. There is a pronounced trend in the law to recognize electronic transactions that are entered into other than through the old-fashioned pen and paper method. For example, the British Columbia Court of Appeal found that the negotiation of an agreement by an exchange of emails resulted in a legally binding agreement even though no formal contract was signed. Also, legislation enabling electronic transactions is now in place in British Columbia, Alberta and Ontario (the “Electronic Commerce Legislation”), as well as in other provinces, that facilitates entering into transactions by non-traditional means.
A signature is not always required to enter into a binding agreement. But what if there is a specific requirement in law that an agreement entered into or obligation created electronically be signed to be effective? The broad definition of the term “electronic signature” in the Electronic Commerce Legislation is helpful in that regard. The definition would include a scanned “traditional” signature on most agreements sent by email or other similar means, but the broad (some might say vague or ambiguous) definition has been found to include other representations that do not look anything like a traditional signature. For example, in each of the following circumstances where there was a legal requirement for a signature the court found that an email containing the sender’s name constituted the required signature:
- An acknowledgment of debt sufficient to extend a limitation period was held to have the required electronic signature by virtue of emails that contained the debtor’s name, business name, title and contact particulars, sent by the debtor to one of the two holders of the debt.
- On the separation of an unmarried couple, they agreed to the transfer of the interest of one of them in their principal residence to the other. An exchange of emails between them which contained the typed first name of the transferring party on her emails was a sufficient signature to satisfy the statutory requirement that a written agreement to transfer land be signed by the transferor.
- An email sent by, and containing the name of, one of two debtors under a promissory note was sufficient to be a signed acknowledgment of debt and to extend the limitation period for the obligations under the note.
However, the apparent ease of creating agreements and signatures electronically does not mean that lenders should change their practices and procedures for entering into express agreements attested to by traditional signatures, whether “wet” ink or (where applicable) scanned. For one thing, the Electronic Commerce Legislation provides that it does not apply to certain types of transactions or agreements, such as negotiable instruments (which would include many promissory notes) and some powers of attorney. Also, proving in any given case that an agreement or other obligation was entered into and signed by an exchange of emails or other similar means is fact-specific and can require proving that the other party intended to sign a binding document. And doing that will almost inevitably require commencing court proceedings, which can be time-consuming and expensive, with an uncertain outcome. Being able to argue that an agreement or other binding obligation was entered into and signed by an exchange of emails or similar means is a useful tool available to lenders in the unusual circumstances when a signature is required but no signed express agreement or other document was obtained. In those circumstances you do not have to despair, a signature may be there even if you do not see anything that looks like a signature. But until those circumstances arise, having a signed paper copy of an agreement or other document on file, or a signed scanned agreement or document available electronically, is still the preferable procedure to follow. Sometimes the old ways are still better.