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Are Electronic Signatures Legally Binding?

Electronic signatures have become a critical component of doing business in a paperless world.

If you have not adopted them yet, you should start! More and more companies are completely ditching paper, and doing everything online. Electronic signatures are the next step in that transition.

Every organization needs signatures, and every organization wants to optimize them.

How Does it Work?

An electronic signature works like a traditional signature on a paper document; only this time, it’s online and on soft/digital documents.

Someone sends you a document via an email that redirects you to the signing platform, and all you have to do is press sign and consent to the agreements.

For the user, it’s actually quite simple.

However, when you look at what happens behind the scenes, that’s another story! But let’s leave those details for another time.

So… Are Electronic Signatures Legally Binding?

The short answer is : Yes, yes it is.

The encryption and authentication processes of electronic signatures go through various levels of security. Many countries, including the U.S, Canada and most of Europe and Asia, consider electronic signatures safe enough to be legally binding and enforceable.

Electronic signatures are replacing written signatures. Not only do they save time and money, but they also create less waste and are traceable, time stamped, and more secure. Most important, they’re legally equivalent to written signatures.

Government of Canada Guidance on Using Electronic Signatures

Legally speaking, Canada has a friendly approach when it comes to electronic signatures. Although contract law in Canada is provincial, the larger umbrella of federal legislation also dictates the rules surrounding written agreements and electronic signatures.

The federal law allows the use of electronic signatures under the 2004 Personal Information Protection and Electronic Documents Act (PIPEDA). The law regards electronic signatures as equivalent to physical signatures and as legally binding. For example:

  • The signature must be unique and distinctive
  • The signature must be created under the signer’s sole control
  • The identity of signers can be confirmed
  • Changes made on the document must be traceable

Nine of the ten provinces use the Uniform Electronic Commerce Act (UECA) to regulate electronic signatures. Only Quebec has a unique set of laws that fall under the Act to Establish a Legal Framework for Information Technology. Nevertheless, the provisions under PIPEDA, UECA, and Quebec’s legislation are relatively similar.

So yes, electronic signatures are legal, but there are a few exceptions where paper signatures are still needed. For example:

  • Court documents
  • Trusts, Wills, and codicils
  • Some real estate contracts
  • Divorce and adoption papers
  • Some powers of the attorney

But it could change in the future!

Is a Electronic Business the Same as a Traditional Business?

In general, all existing laws that apply to traditional commerce apply to business conducted via the Internet. Laws governing business incorporation, business name registration, taxation, consumer protection, advertising, importing or exporting, product safety, product standards, intellectual property and liability and so on, apply to e-business.

We hope this article was useful to you. Our team also did a deep-dive into Zoom and if the platform is secure. Read about it right here.