Except for few specific circumstances, it is almost considered ancient to have parties to a contract physically meet up to a sign a contract in a boardroom. With the fast-paced lifestyles of most high-level executives, a more efficient method of signing contracts has been introduced: the e-Signature.

 

Although convenient, do e-signatures really create a valid and binding contract? Can e-signatures really replace hand-written signatures?

 

The Law

 

An e-signature can be considered a valid signature. In various jurisdictions, legislatures have enacted laws to deal with electronic signatures. For example, section 11 of Ontario’s Electronic Commerce Act provides:

 

“Subject to subsections (3) and (4), a legal requirement that a document be signed is satisfied by an electronic signature.”

 

But what if you didn’t provide the e-signature?

 

In a recent case, Ghaed v Telus Communications Co, 2013, (BC) the plaintiff disputed his obligation to make a payment under a signed services contract. The plaintiff argued that although the agreement had his electronic signature, since he had not placed the electronic signature on the agreement, he was not bound by it. It was established that the signature had been placed on the agreement by his office manager. The office manager stated she was given express consent by the plaintiff to accept the services contract. Based on this sequence of events, including an opportunity for the plaintiff to terminate the contract, the court found that the services contract was valid and binding on the plaintiff.

 

The Exceptions

 

An electronic signature may not be an acceptable method of signature for all legal agreements. The following agreements cannot be validated by an electronic signature (in Ontario):

 

  • Wills and codicils;

  • Promissory notes; and

  • Documents transferring land title.

Before you e-sign away…

 

  • Ensure that you have agreed to all the terms of the agreement and the other party’s information has been included in the execution line.

  • The electronic signature should be reliable in identifying the signee. A simple copied image of a signature may not be traceable to the signee. However, a digital signature used in conjunction with a document signing software may suffice as reliable in identifying the signee.

  • In order to avoid uncertainty and a potential dispute, it may be a good idea either to confirm with the other party that electronic signatures are permissible for the execution of the contract, or to include a clause in the contract recognizing the validity of electronic signatures.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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