Evolving Relevance of Electronic Signatures Over “Wet” Signatures in Commercial Transactions

Electronic signatures are considered equal in weight to handwritten or “wet” signatures under Canadian law.[1] The Personal Information Protection and Electronic Documents Act (PIPEDA)[2] governs federal electronic transactions, with most provinces having implemented additional legislation governing provincial electronic transactions.

Alberta’s Electronic Transactions Act (ETA)[3], British Columbia’s Electronic Transactions Act (ETA)[4], and Ontario’s Electronic Commerce Act (ECA)[5] recognize the validity of electronic signatures in their respective jurisdictions. A recent Ontario Superior Court decision in electronic commerce law suggests that electronic signatures provide buyers with greater insulation in commercial transactions and may serve as a relevant case precedent in Alberta.

Ahmad v. Ashask dealt with a failed real estate deal involving residential property. The plaintiff wished to purchase a house and contracted an agreed upon price with the seller. The defendants argued that the parties had not formed a valid contract in signing the agreement electronically.[6] Issues outlined below provide context for how the courts may view electronic signatures in comparison to wet signatures.

The defendant first argued that the initial Purchase and Sale Agreement was signed invalidly. The agreement was set for expiry on June 30, 2020, at 2:15 pm. The plaintiff signed the document electronically and wrote 2:15pm as the time signed. However, the electronic timestamp for the signature was recorded as 3:46 pm/3:47 pm. The defendant argued that by the time the sale agreement was signed, the offer had expired and was invalid. The Ontario courts agreed that at this time, it would have been in the defendant’s right to communicate that they were no longer bound by the offer, and that they could have given the property to anyone else. However, the defendant accepted the deposit sent by the plaintiffs at this time, signaling their acceptance of the offer and creating a valid agreement of purchase and sale.[7]

The second issue dealt with the validity of the amended agreement signed as a “wet” signature. Though the initial closing date on the property was set to September 29, 2020, the defendant requested to extend it to November 30, 2020. The plaintiff agreed to this request and an Amendment to the Agreement of Purchase and Sale was prepared on September 24, 2022. The amended agreement was irrevocable by the defendants until 11:00 pm that same day. The plaintiff maintained that the amended agreement was signed in pen prior to 11:00 pm.  An electronic time stamp was not present to confirm the precise time of the signature. The agreement was also not delivered physically or electronically until a later point in time.[8] The defendant refused to sign the amended agreement as a result.[9]

The Ontario courts noted that signing the amended contract in pen made it more difficult to determine if it was signed prior to the expiration time, whereas the electronic signature signed during the initial Purchase and Sale Agreement revealed an accurate time stamp.[10] The courts held that regardless of this ambiguity, the defendant’s refusal to sign the amended contract was a clear repudiation of the initial agreement signed on September 29, 2020. The remedy of specific performance was issued to the plaintiff as a result.[11]

This decision suggests that electronic signatures may be best used in commercial contracts as they establish an exact time stamp for a signature. Wet signatures in contrast fail to record the exact time of a signature, leaving an air of ambiguity in the agreement. While this decision was rendered by the Ontario courts, it may serve as a relevant case precedent in Alberta.

For more information on this decision and the Ontario court’s reasoning, read the full judgment here.

 

[1]“Practice Support & Optimization Law and Practice of Electronic Signatures” online: Dentons Memo (April 2020) [https://fertilizercanada.ca/wp-content/uploads/2020/09/Guidelines-for-the-use-of-electronic-signatures-1-April-2020.pdf].

[2] Personal Information Protection and Electronic Documents Act, SC 2000, c 5 [PIPEDA].

[3] Electronic Transactions Act, SA 2001, c E-5.5 [ETA].

[4] Electronic Transactions Act, S.B.C. 2001.

[5] Electronic Commerce Act, 2000, S.O. 2000, c. 17 [ECA].

[6] Ahmad v Ashask, 2022 ONSC 1348 at para 1 –5.

[7] Ibid at para 115 – 118.

[8] ibid at para 20 – 25.

[9] Ibid at para 77, 146.

[10] Ibid at para 141.

[11] Ibid at para 150-159.

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