COVID-19: Electronic Signatures and Formal Requirements

The novel coronavirus (COVID-19) pandemic forced a mass and rapid exodus of businesses from offices to working remotely, which challenged businesses to adopt new processes, new mandates, and new structures to survive. One such challenge is how businesses should go about obtaining signatures for legally binding documents. This challenge is further complicated for certain types of legal documents, such as wills and powers of attorney, which traditionally require signatures to be witnessed in the physical presence of two people, or the commissioning and notarizing of documents which traditionally requires being in the physical presence of a commissioner or notary. 

This article will discuss: (i) the legal framework and technology behind electronic signatures to explain why they can and should be used as an effective alternative to hand-written signatures; and (ii) the two legislative measures recently enacted by the Ontario government to temporarily permit the electronic witnessing and signing of wills and powers of attorney in counterparts, and to allow remote or virtual commissioning of oath and declarations. An understanding about electronic signatures and the new legislative measures can help address some of the challenges faced by businesses and individuals in signing various legal documents during COVID-19.

What is an Electronic Signature?

In Ontario, the use of electronic signatures is governed by Ontario’s Electronic Commerce Act (the “ECA”). Similar statutes to the ECA exist in other provinces and territories in Canada with minor differences. The ECA defines electronic signatures 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 documents.” In practice, this means an electronic signature can take the form of a signature signed by a stylus on a touch screen, a typed name at the end of an email, or clicking an “I accept” button on a website.

Under the ECA, an electronic signature is as equally enforceable and binding as a handwritten signature, provided that there is consent and intent between the contracting parties to use electronic signatures and the electronic signatures can be reliably linked to a signatory.

 Are Electronic Signatures Safe to Use?

The use of electronic signatures often raises concerns about its susceptibility to fraud. However, an understanding of electronic signature technology will demonstrate that electronic signatures may actually be more secure than handwritten signatures.

Electronic signature technology uses email to notify a signatory that certain documents require signature(s). Behind every electronic signature is a collection of metadata cataloguing all the steps from the moment an electronic signature request is sent out to when the electronically signed document is returned. This collection of metadata creates a digital audit trail which generally tracks the following information:

  • When an email request for an electronic signature was sent out;
  • To whom an email request was sent out to;
  • When the email request was opened;
  • When the document was electronically signed and returned; and
  • Precise details about the computer or device used to electronically sign the document (type of computer, IP address, etc.).  

The audit trail is safely stored and provides a record that can be used to verify the validity of an electronic signature. Having an audit trail dramatically increases the technical challenge of faking a signature, and the information contained in the audit trail can serve as a safeguard to prevent tampering with documents after they have been signed. Therefore, an audit trail may actually provide a more effective way to ascertain the validity of a signature when compared to hiring handwriting experts to analyze a handwritten signature.

Recent Legislative Amendments to Certain Classes of Documents

Although electronic signatures can serve as an effective alternative to original signatures for many legal documents, their application to certain classes of documents in Ontario may be limited or impractical. For example, Ontario statutes require that wills and codicils, trusts created by wills or codicils, and powers of attorney be hand signed by a signatory and witnessed in the physical presence of two other persons to be enforceable. Similar limitations apply in Ontario for the swearing of an oath or declaration, which carry a legal requirement that they be administered in the physical presence of a commissioner.

In light of the challenges to arranging in-person meetings during COVID-19, the Ontario government has enacted temporary legislation effective from July 21, 2020 until November 21, 2020 (which is expected to be extended) to permit remote witnessing and signing of wills and powers of attorney in counterparts, provided that at least one witness is an Ontario-licensed lawyer or paralegal at the time of signing. Where a will or power of attorney is witnessed remotely, the testator or grantor and witnesses may sign on separate identical copies of the will or power of attorney in counterparts which together shall constitute the entire will or power of attorney. By giving validity to wills and powers of attorney signed and witnessed remotely in counterparts, this provisional legislation enables people to organize their affairs in the event of their illness or death while safely social distancing during COVID-19.

Further, as of August 1, 2020, the Ontario government has amended the existing legislation governing commissioners to permit the remote or virtual administering of an oath or declaration provided that certain technology standards and

procedures are met. This amendment facilitates the administering of oaths or declarations during COVID-19 that may be required for court purposes (e.g. small claims court procedures) or for business transactions (e.g. the sale of a business) by removing the requirement to be in the physical presence of a commissioner.

Amendments similar to the one for remote commissioning a declaration or oath are expected to be passed soon by the Ontario government for the remote notarization of documents, although the conditions enabling remote notarization have yet to be finalized.

Conclusion

As the circumstances surrounding COVID-19 continue to evolve, electronic signatures have risen to prominence as the go-to method for obtaining signatures (insofar as, for the type of document being signed, the relevant conditions as set forth above are met).

Overall, the use of electronic signature and other technological advances to promote commercial activity is likely to accelerate. The permitted use of electronic signatures where they were not previously permitted gives rise to the potential of permanent adoption of such temporary measures post-COVID-19. Therefore, adapting to the use of electronic signatures and other technologies is becoming increasingly necessary to maintain competitiveness in the rapidly changing and pandemic-driven marketplace and beyond.

For more information about the article, please contact Allan Ritchie, Althea Yip, or Gordon Chan.