Electronic Contracts & Signatures: Best Practices

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Electronic Contract Availability

Canadian e-commerce legislation supplements traditional contract law to enable the enforceability of electronic contracts in Canada. Because the law of contract is a provincial responsibility in Canada, the key legislation in this area is provincial. In all provinces except Quebec, the e-commerce statute is based on the principles enunciated in the UN Model Law on Electronic Commerce, adopted in 1996. Canada takes a functional equivalency approach to e-commerce, so electronic contracts are legally valid where there is offer and acceptance.

Both web-wrap and click-wrap agreements have been recognized by the Canadian courts, but only where the offer and acceptance requirements are met. For example, in Rudder v Microsoft (1999, 2 CPR (4th) 474), the court held that clicking on an ‘I agree’ icon served as valid acceptance of an offer. However in Aspencer1.com Inc v Paysystems Corporation (JQ no 1573, JE 2005-601), a Quebec judge held that an organisation could not modify the terms of a contract by posting them on its website, on the grounds that there was no proof of real acceptance by the user. But in Aspencer1.com Inc v Paysystems Corporation (JQ no 1573, JE 2005-601), a Quebec judge held that an organisation could not modify the terms of a contract by posting them on its website, on the grounds that there was no proof of real acceptance by the user.

There are no data retention requirements specific to electronic contracts in Canada. Instead, electronic contracts are viewed as functionally equivalent to paper contracts and are therefore subject to the same data retention requirements as those contracts done in writing. For example, the Canada Revenue Agency requires all tax documents to be retained for at least six years. Provincial electronic transaction legislation provides that electronic records are equivalent to paper originals where the electronic documents have integrity (ie, are complete and unaltered) and where they are retainable.

Electronic Signatures

Electronic signatures are legally valid in Canada. Provincial e-commerce acts provide that the legal requirement of a signature is satisfied by a signature produced electronically. However, exceptions apply in a variety of cases, including wills, powers of attorney, negotiable instruments, affidavits, certain business incorporation and corporate finance documents, and documents in which IP rights are granted.

Best practices relating to e-signatures in Canada include:

  • giving proper notice that e-signatures will be used. Anytime a party is executing a contract electronically, they must intend to do so. In limited circumstances intent may be implied, although when dealing with consumer transactions, the consumer must overtly be aware that they are executing a documenting digitally;

  • authenticate the signers' identity. Ensure the party executing the contract is the correct person. This can be accomplished by through a secure link, or using some form of multi-factor authentication;

  • ensuring that the method of collecting the e-signatures complies with privacy requirements; and

  • maintaining accurate records on the consent to use, accept and the delivery of e-signatures.

Our team has extensive experience assisting clients with digital and traditional contracts, let us know if you have any questions at info@bhlegal.ca.