Canadian lawmakers have taken a non-restrictive approach to regulating electronic contracts and records. Although officials in the country have created guidelines and regulations as a way to determine the legality of online records and e-signatures, these guidelines are “technology neutral” and minimal in scope.
The legal requirements for e-signatures in Canada are very similar to those in the United States. Rather than trying to impose too many rules and sanctions with regard to how e-signatures are created, the Canadian government has enacted a set of standards that remain relatively neutral on the subject of electronic records and contracts, so as to promote international e-commerce while still protecting Canadian consumers and businesses that engage in transactions online.
Uniform Electronic Commerce Act
Officials in Canada have determined that electronic records, and e-signatures specifically, should follow the rules set forth in the Uniform Electronic Commerce Act.
Adopted in 1999, the Uniform Electronic Commerce Act (UECA) was originally developed as a way to clarify the legal questions that had emerged regarding electronic transactions in Canada. The standards set forth in the Act closely mirror those set by the United Nations in the Model Law on Electronic Commerce in 1996.
Although the UECA has not been adopted throughout Canada, the few jurisdictions that have not adopted the guidelines – which include Nova Scotia, Prince Edward Island, and Yukon – have enacted legislation that is extremely similar and even goes as far as to use much of the same language. Quebec is one province that has chosen to branch out with its own set of standards, discussed later in this article.
The UECA clearly states that a contract or document should not be “denied legal effect or enforceability solely by reason that it is in electronic form.” This is remarkably similar to the U.S. standards, and it is part of the reason why people in both countries are able to do business online so easily today.
A few key aspects of the UECA that are worth noting include:
Within the UECA, the definition of an electronic signature is taken to mean, “information in electronic form that a person has created or adopted in order to sign a document and that is in, attached to or associated with the document.” The Act makes it clear that a signature may be electronic and does not have to be written in wet ink to be perfectly legal.
Forming Binding Contracts
For businesses that are looking to ensure that their online contracts are valid, the most important part of the UECA is Section 20(1). The guidelines state that offers can be made or accepted with an electronic document or an electronic form, more commonly known as an interactive form. This section of the Act is what gives businesses in Canada the ability to let customers agree to the terms of a contract on a webpage by making a clear indication of intent.
Canadian laws mirror U.S. laws in that e-signatures are not valid on wills, trusts, and certain court-related documents. Both the U.S. Uniform Electronic Transactions Act (UETA)and Canada’s UECA apply to electronic contracts that fall into the categories of commerce, government, and individual use.
E-Signatures in Quebec
Electronic transactions that take place in Quebec are governed by the “Act to establish a framework for information technology,” which was passed in 2001 in an effort to ensure the “legal security” of electronic communications between people, associations, partnerships, and the State. Quebec’s Act is technology neutral, allowing consumers and businesses to determine for themselves which e-signature technologies are best suited for their individual needs.
Personal Information Protection and Electronic Document Act
The Personal Information Protection and Electronic Document Act (PIPEDA) is an act that is applicable to every federally regulated business that collects personal information from consumers in Canada. Although the Act was passed in 2001, it was not fully implemented until 2004. Now that more businesses in Canada are managing customer transactions electronically, it has become more important for companies to take note of these specific regulations when determining the ways in which they save and store their data online. Specifically, PIPEDA mandates that businesses should only collect consumer personal information that is appropriate to a particular transaction, and businesses should obtain consumer consent to collect this information. PIPEDA also clearly describes “secure electronic signatures” with the following requirements:
- the electronic signature must be unique to the person using it;
- the person whose electronic signature is on the document must have control of the use of the technology to attach the signature;
- the technology must be used to identify the person using the electronic signature; and
- the electronic signature must be linked to an electronic document to determine if the document has been changed after the electronic signature was attached to it.
Together, Canada’s UECA and PIPEDA establish a framework for businesses to use electronic signature software to obtain legally binding signatures online.