The law and legality of electronic signatures in Canada
You spend a ton of time in the office, signing doc after doc, (hopefully) eliminating the heaping pile of paper.
Who knows how long this could take — maybe one, two, or three-plus days. Often it looks like there is no end in sight.
Sound familiar? Nearly half of companies today still print documents and sign them. 22% of organizations spend over a week collecting physical signatures.
But why do business owners let their employees and themselves suffer when electronic signatures (andfree electronic signature software)exist?
In Canada, many people believe that physical signatures have greater legitimacy than digital ones.
But this isn’t true: according to Canadian electronic signature law, 95% of documents and transactions can be verified electronically.
Are electronic signatures legally binding in Canada?
Canada is known for its flexible and technology-friendly approach to the document signing process.
The use of electronic and digital signatures in Canada has increased in recent years, and most courts and judges are supportive of their use.
However, unlike a majority of countries worldwide, Canada is a federation that consists of 10 provinces and three territories.
This means that electronic signatures in Canada are regulated by both federal and provincial law.
Each province has its own laws and regulations surrounding the use of electronic documents and signatures.
Contract law in Canada is provincial, so the validity of each agreement reached between two or more consenting parties (unless they are regulated federally) is governed by the law of each province.
Some provinces even have specific requirements for using eSignatures with government entities.
If a given statute or regulation does not specify the method of execution, electronic signatures are usually enforceable in court. But in certain cases, the type of electronic signature used can impact its enforceability.
For example, if the authenticity of an eSignature is challenged, the party seeking to enforce it may need to provide extra evidence to prove the signature’s validity.
What constitutes a legal signature in Canada?
Since the mid-1990s when documentation began to “go digital”, a number of jurisdictions have developed laws and standards to create more legal certainty for electronic documents and signatures.
In fact, the Department of Justice Canada website lists more than 20 federal acts and almost 30 regulations referring to electronic signatures.
These laws are based on internationally recognized rules, and demonstrate that electronic communications should not be denied legal effect simply because they are in electronic form.
For instance, the Uniform Electronic Transactions Act (UETA) gives electronic signatures the same legal effect as traditional handwritten signatures under the statute of fraud.
The term “electronic signature” can apply to:
- A name typed at the end of an email message
- A digitized form of handwritten signature
- An electronic drawing of a signature
- A unique password, code, or personal identification number, or
- A digital signature is created through the use of public key cryptography
There are circumstances when original documents with “wet signatures” may still be required, such as on share certificates and for security transfer powers.
Tax forms submitted to the Canada Revenue Agency (CRA), too, usually have to be signed by hand, although this rule was relaxed during the pandemic.
In Canada, electronic signatures are distinguishable from “secure electronic signatures”.
These are typically required only in specific circumstances and must have an associated digital signature certificate from a verified certification authority.
As we mentioned, the legality of electronic signatures in Canada may differ between provinces, while federal laws are different again.
It’s best to take legal advice before using electronic signatures.
Government of Canada’s digital signature policy
The Canadian Government recognizes the increased use of electronic and digital signatures in Canada.
It states that the fundamental purpose of a signature is the same whether it’s paper-based or electronic.
Although the terms are often used interchangeably, there is a difference between electronic and digital signatures.
Digital signatures are a form of eSignature, but they boost security by encrypting documents using the sender’s private key. So, are digital signatures legal in Canada?
The Government of Canada offers guidance on digital signatures and secure eSignatures, including steps to ensure the signing operation is performed with legitimate credentials.
For example, you should verify that the public key certificate that corresponds to the private signing key:
- Is within its specified validity period
- Has not been revoked
- Successfully chains to a recognized trust anchor.
As circumstances may change over time, long-term validation is also important, such as cryptographically binding certain information to the originally-signed electronic document or record.
Federal and provincial eSignature law in Canada
On the federal level, the use of eSignatures was officially endorsed by the Personal Information Protection and Electronic Documents Act (PIPEDA). The act came into effect in 2004.
According to the law, each kind of eSignature is equivalent to a physical one and is fully court-admissible.
Each company operating in the Canadian market is free to use both digital and paper documents — the law recognizes them as equally valid.
However, PIPEDA has reiterated the explicit requirements for an electronic signature to be secure. According to them, an eSignature should be:
- Unique and distinctive
- Created under signer’s sole control
- Can confirm the identity of the signatory
- Protected by the technology that can detect any subsequent changes in the document
This means that you can’t just draw an “X” or another kind of icon to sign your document. Marks like these can’t be identified as unique and can’t prove your identity.
On the provincial level, eSignatures in Canada have been accepted by law since 1999, as a part of the Uniform Electronic Commerce Act (UECA).
Nine provinces use this act as a universal set of legislation when Quebec is the only province that has its own electronic signature laws stated in the Act to Establish a Legal Framework for Information Technology.
The requirements for eSignatures of UECA and PIPEDA are quite similar, and both laws are “media neutral” and follow the “minimalist” approach to digital transactions.
So the digital form of the document is not the reason to consider it invalid or unenforceable.
So let’s recap everything we mentioned above:
- Can I use eSignatures for business in Canada?
Yes, Canadian eSignature laws allow signing documents without ink and pen in 95% of all cases.*
- Are eSignatures court-admissible in Canada?
Yes, you can provide a digital document signed electronically as evidence in court as well as a paper one.
- What is the legal model of an eSignature in Canada?
Electronic signature law in Canada uses an open model. It means that any eSignatures are legally-binding unless the contrary was proven.
* The list of exceptions will be provided in one of the next paragraphs.
Standard electronic signature in Canada and its use cases
Canadian law doesn’t recognize advanced or qualified electronic signatures like the higher levels of assurance often classified in other countries.
Canada only has a standard electronic signature (SES), defined by UECA as “electronic information that a person creates or adopts in order to sign a document and that is in, attached to or associated with the document.”
You can sign contracts, quotes, proposals, invoices, and many other kinds of documents electronically.
Electronic signature laws in Canada outline only a few exceptions where you still need to print a document and sign it by hand. Those are:
- Wills and codicils
- Trusts created out of wills and codicils
- Certain powers of Attorney
- Divorce and adoption family law documents
- Some legally required disclosures to consumers
- Official court documents
- Some real estate agreements
- Promissory notes
If you work with public bodies (governmental departments, agencies, and ministries), you should consider each of their requirements.
Each may set its own technological standards for the use of an electronic signature in Canada.
Also, it is highly recommended to discuss the potential to apply electronic signatures to all parties involved in the business transaction to avoid any misunderstandings.
Use PandaDoc to eSign documents
Do you run a business in Canada and want to streamline your document workflow? PandaDoc is the solution for you.
We’ll take you one step further than most electronic signature software, however — PandaDoc is a document automation solution that can help you digitize, track, and organize all your paperwork.
Aside from unlimited opportunities for creating electronic signatures in Canada or elsewhere, PandaDoc has many advanced features for eSigning including signing orders, multiple approval workflows, and document forwarding for signing.
Plus, we designed our software to be fully compliant with electronic signature laws in 42 countries, including Canada.
After switching to our software, companies reduce time spent on paperwork and significantly increase their revenue.
The experience of Tapfluence is evidence alone: the company saved 15 hours per week and boosted its close rate by 57%.