COVID-19 and Electronic Documents: Yes, you can (mostly)

Social distancing doesn’t really jibe with sitting down at a table and passing a document around to be signed. Sure, you could print your document and mail it to the other person (or persons) who need to sign it, but that’s slow. Couriers are quicker, but more expensive.

What about electronic documents?  Is there any reason why a particular agreement needs to be signed the old fashioned way, in order to be viewed as an enforceable contract?

In Manitoba, the answer (for the most part) is that you’re free to enter into an agreement electronically, in the place of a paper and ink (or wet) signature. This can be a helpful tool to have in your arsenal, as more and more people conduct business remotely (from their homes, or otherwise).

We used to have a law called The Statute of Frauds, which required certain kinds of agreements (for example, agreements to buy or sell land, or guarantees) to be in writing, as a condition of enforceability. But that law has been repealed. This means that, as a general principle, you can enter into an agreement verbally, or through a course of conduct. The agreement need not even be written, never mind signed electronically. There are, of course, many reasons why it is good to record your agreements in writing – proving the existence and terms of an unwritten contract can be very difficult – but these are questions of proof, rather than enforceability.

With this in mind, you can see how in most cases, agreements can and are entered into electronically, all of the time. When you visit a website, you’ve electronically accepted its terms of use and privacy policy, by your decision to access the website. We are all aware of the ubiquitous check boxes that are a precondition to buying something online – these check boxes indicate your agreement to be bound by the terms of the applicable sale agreement, which you accept when you click the box. Contracts can also be entered into by an exchange of emails.

In each case, you need to prove the other side was given notice of the applicable terms, and that they did something to accept them, but this is again a question of proof, rather than a matter of basic invalidity.

Are there some agreements or documents that can’t be entered into electronically?  Yes, there are. When we consider electronic contracting, we need to be aware of situations in which:

    •  there is an obligation, set by a law, for something to be “in writing”, or “signed”, or for a “document” to be retained; and

    •  that legal requirement is understood to either expressly or by implication exclude electronic documents.

If there is no legal requirement for a document to be “in writing”, “signed”, etc., then electronic documents do not ordinarily raise a concern. As indicated above, contracts can be entered into verbally, or by way of a handshake – the law does not usually require a wet signature, to create an enforceable contract.

Even if there is a legal requirement for a document to be “in writing”, “signed”, etc., the law is at a point where it is generally understood that the requirement can be met electronically. The exception is for things like wills, certain things that are done with respect to insurance (such as cancelling a policy), and legal documents (like affidavits or land titles documents). But generally speaking, courts understand that ecommerce is to be promoted, so they don’t look to disqualify documents, just because they were entered into electronically.

The more fundamental issue relates to making sure the system that is used to enter into agreements electronically can be counted on to retain and preserve the integrity of the agreements.

The system needs to be “reliable and authentic”. “Reliable” means that the agreements can be reproduced, if they are ever needed (e.g., providing sufficient back up). “Authentic” means that there is a process to ensure the person purporting to enter into the agreement is who they say they are, and that the agreement wasn’t altered after it was entered into. That is really a function of the integrity of the system – is the login secure, are people given passwords, etc.

If this is done by a service provider (for example, an off-the-shelf service like DocuSign or Adobe Sign), then that would be something for the service provider to handle, since it creates and runs the service, though of course any client would have an interest in making sure the service is secure, because it would be affected by a failure to confirm the authenticity of the document.

Some other tips are as follows:

    •  It is important to make sure the party is given sufficient notice of whatever they are asked to agree to. This means that there is an opportunity to review the agreement, before it’s signed (just like a paper-and-ink document, it’s the opportunity to read the agreement that counts, rather than whether the person actually read the document).

    •  The agreement could contain a clause by which the parties acknowledge that the agreement is being provided and entered into electronically, that the person agrees to communicate electronically, and that the method for accepting the agreement (e.g., clicking on a button, typing a name, etc.) constitutes and is deemed to be the same as the person’s signature. This isn’t strictly necessary, but it’s a best practice.

    •    A copy of the agreement should be provided to the parties (this could be done either by an email or by giving them an  opportunity to print it).

    •    The document retention system should indicate when the agreement was entered into.

    •    A business should accommodate those people who specifically ask for a paper-and-ink version, instead of doing things electronically.

Please do not hesitate to contact your relationship partner or lawyer if you have any questions or if we can be of assistance in guiding you through these new challenges.

This article was prepared by:

ANDREW J.D. BUCK
PARTNER
204.956.3569
[email protected]

This article represents general information and is not legal advice. Please contact us if you would like legal advice that is tailored to your particular circumstances. We would be happy to help.

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