With so many registered firms operating remotely and avoiding in-person meetings with potential clients wherever possible during the COVID-19 pandemic, the question has arisen again whether electronic signatures (e-signatures) are acceptable for various agreements with the firm’s clients. The answer depends on several factors:
- What the law says: In Canada, all the provinces and territories except Québec have adopted legislation based on the Uniform Electronic Commerce Act (UCEA), which provides, in effect, that a contract, record or signature will not be unenforceable solely because it is electronic. (Québec’s legislation incorporates many of the same principles but doesn’t follow the UCEA model.) There are some provincial variations in the legislation, with some provinces having stricter requirements regarding, for example, the type of e-signature that is acceptable. For contracts governed by Ontario law, the Electronic Commerce Act (Ontario) (OECA) provides that an e-signature is acceptable if it is reliable for purposes of identifying the person signing the document and the association of the e-signature with the relevant document is reliable.
- What the parties to the contract agree to: The UCEA and similar legislation facilitate electronic contracts and e-signatures but do not require them. The parties to a contract can agree to a different arrangement. Therefore, registrants that, to date, haven’t been using e-signatures in particular contracts should check that the contract in question provides for the contract to be in electronic form and signed with e-signatures.
- The contract’s subject matter: Certain categories of contracts, such as negotiable instruments, some types of real estate agreements and some types of powers of attorney, may require a “wet ink” signature (although some of these restrictions have been relaxed during the pandemic). In Ontario, there is no prohibition on subscription agreements, investment management agreements and similar client relationship agreements using e-signatures.
- What the firm’s articles, by-laws, policies and procedures say: The registered firm should confirm that its articles, by-laws, policies and procedures do not restrict the use of e-signatures and determine if any particular form of e-signature is required. Although such restrictions are rare, it is important to verify that neither the registered firm nor any client that is an entity is subject to any restrictions on the proposed form of e-signature to be used, especially when a change in firm practice is being considered.
Of course, firms should maintain fully signed and complete electronic contracts just as they would for paper contracts with wet signatures, and they should have a contract execution policy that expressly provides for electronic contracts and e-signatures. It’s also especially important these days, when so many people are working remotely, to organize the firm’s executed contracts so that they can be easily found.
If you have any questions about whether an e-signature is acceptable for a particular type of contract or wish to update your policies and procedures to provide for electronic contracts and e-signatures, please do not hesitate to contact us.
April 30, 2020