e-sign legalities in the US & Canada

POSTED June 16, 2020

A common belief among many businesses is that physical signatures have greater legitimacy than digital signatures. But this isn’t true. Around the world, eSigned documents are considered legit for almost all transactions and documentation with minimal exceptions. With unique regulatory laws governing electronic signatures in every country, this article is a brief outline of the legislation in place in the US and Canada that deal with e-signatures.

In both the US and Canada, all the territorial/state-level laws states:

  • e-signatures and electronic records have the same legal effect as physical signatures and records.
  • A record, signature, or a contract may not be denied legal effect solely because it is in electronic form.
  • If a law requires a record in hard-copy, an electronic record complies with the law.
  • If a law requires a hand-written signature, an electronic signature complies with the law.

Electronic signature legality in the United States

In the United States, the Federal Electronic Signature in Global and National Commerce Act (The E-Sign Act) and the Uniform Electronic Transactions Act (UETA), governs the legal framework for e-signatures and electronic contracts.

Both the UETA and the E-Sign Act define an electronic signature as, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record," and an electronic record is a record that is, "created, generated, sent, communicated, received, or stored by electronic means."

The E-Sign Act applies to all interstate and foreign commerce, and almost every commercial business contracts in the United States comes under the E-Sign Act. Specific businesses may also have particular eSignature regulations that concern to their industry inflicted by federal and state laws.

UETA gives states a structure to enact state law concerning the enforceability of e-signatures and the legality of electronic records. New York, Illinois, and Washington are the only states that have not adopted UETA. Each of these states has established acts similar to UETA to govern and handle electronic transactions. These statutes are the Electronic Signatures and Records Act (ESRA) in New York, the Electronic Commerce Security Act (ECSA) in Illinois, and; the Electronic Authorization Act (EAA) in Washington.

United States legal requirements include:

  • An electronic signature is only valid if the consumer agrees with the use of electronic records in transactions and intend to eSign it.
  • Customer to receive a copy of UETA customer consent disclosures and have not withdrawn their willingness for electronic transactions.
  • Adding a textual or graphic statement to the record to prove it was signed electronically.
  • Prior information to the customer about any software or hardware required to access the records.
  • Retaining records with easy accessibility for any person entitled to access them.
  • The consumer can anytime retrieve their consent to use electronic records and signatures.

Electronic signature legality in Canada

Uniform Electronic Commerce Act (UECA) governs the e-signature standards in all Canadian provinces and territories except Quebec. Quebec has adopted its own law not based on UECA, the Act to Establish a Legal Framework for Information Technology to provide a binding to the standards. On the federal level, Personal Information Protection and Electronic Documents Act (PIPEDA) endorsed the use of eSignatures officially. The act became in effect in 2004.

According to the laws of UECA, electronic means, "created, recorded, transmitted or stored in digital form or another intangible form by electronic, magnetic or optical means or by any other means that has capabilities for creation, recording, transmission or storage similar to those means." An electronic signature is defined as, "information in electronic form that a person has created or adopted to sign a document, and that is in, attached to, or associated with the document."

Canadian legal requirements include:

  • An electronic signature is only valid if the consumer agrees with the use of electronic records in transactions and intend to eSign it.
  • Customer to receive a copy of UETA customer consent disclosures and have not withdrawn their willingness for electronic transactions.
  • Adding a textual or graphic statement to the record to prove it was signed electronically.
  • Prior information to the customer about any software or hardware required to access the records.
  • Retaining records with easy accessibility for any person entitled to access them.
  • The consumer can anytime retrieve their consent to use electronic records and signatures.

Documents that cannot be signed electronically.

In both Canada and the USA, the laws outline certain documents are needed to be printed on paper and require wet-ink signatures. These include:

  • Testamentary trusts, wills, and codicils
  • Certain powers of attorney
  • Divorce, adoption and other family law documents
  • Some legally required disclosures to consumers
  • Official court documents like notices and pleadings
  • Some real estate transfer documents and agreements
  • Promissory notes
  • Health and safety affecting product recall notices
  • Stock certificates and other certificated investment securities

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