Electronic Signatures: A Simple Solution for Radical Transformation
October 28, 2024
In March 2021, Kent Mickleborough, a representative of South West Terminal Ltd., texted a picture of a contract to purchase 86 tonnes of flax at $17/bushel to Chris Achter, of Achter Land & Cattle, along with the message “Please confirm flax contract”. Achter replied: 👍.
When the flax never arrived, Mickleborough took Achter to court. On June 6, 2023, the Court of King’s Bench of Saskatchewan ruled that Achter must pay $82,200 in damages for breach of contract and non-delivery.
Surprised? Shocked? Curious? Whatever your reaction to this ruling, one thing is certain: times have changed, and how we enter into legally binding agreements today is different than even 10 years ago.
The Government of Canada has had e-signature laws on the books since the 1990s. And still, a lot of business owners seem to be holding out with their pens and paper, waiting around for the digital age to arrive. If this ruling has shown us anything, it’s that the digital age is already here.
The way we communicate and conduct business has changed. A 👍 wouldn’t usually be considered a signature, but even the courts are recognizing that what counts as a contractual agreement is no longer tied to just pen and paper.
In our new digital world, you, your employees, and your partners might be agreeing to things without realizing it—which is why it’s so important to meet the requirements we discuss below to mitigate risk and safeguard your business.
Signatures establish identity, intent, and agreement. In this case, the identity of the signer was proven through his telephone number; intent and agreement were proven because on numerous previous occasions, the parties entered into similar agreements by text with single-word responses like, “OK.” Therefore, the generally understood meaning of the 👍 emoji, previous business procedures, and the fact the criteria for a signature were met meant that the 👍 constituted a legally binding signature for the contract in question.
Disagreements are a reality of doing business. If you’re in business long enough, odds are you will have a professional dispute of some kind: chasing after an unpaid invoice, unmet contractual obligations, disagreements with an employee or landlord, the list goes on.
In this case, the courts had to decide who was in the right. They did not render a decision until almost 2 years after the start of the dispute. That’s a long time to wait for nearly $100,000, and a lot of businesses wouldn’t be able to bear the cost.
What can you do now to ensure your signatures and agreements are not up for interpretation down the road?
The world is moving forward, not backward. Electronic signatures are the new normal, and even emojis can stand up in a court of law as a legally binding form of signature. But when your livelihood is on the line, don’t leave your electronic signatures to chance. Make sure you have the following to do business with peace of mind:
In this surprising emoji case, past procedure was crucial: the judge determined that past behavior, agreeing to contracts in a similar way and fulfilling the obligations under those contracts, helped to establish intent. Documenting and following a specific procedure for electronic signatures will help you demonstrate intent (or lack thereof) in the event of a dispute.
Identity is an important aspect of all signatures, not just electronic ones. Notaries verify signers’ identities in person, and for electronic ones, there are assurance levels.
The Government of Canada has established 4 different assurance levels for establishing identity, and assurance level 4 is the highest, providing very high confidence that an individual is who they claim to be. Not all e-signature platforms provide assurance level 4, and so it’s important to check.
How can you ensure the validity of your signature is attested and recorded somewhere secure and safe, in the event you or your e-signature provider goes out of business or suffers catastrophic data loss? The answer is long-term validation, which acts like a digital notary: a third party saves your signature data in a secure place so that if anything happens to the original record, there’s a reliable backup.
Proof of evidence files are the digital summaries of an e-signature platform’s detailed audit trail. When proofs of evidence meet certain standards, they ensure signatures hold up in court because they also help establish signer identity, signing time, whether the document was printed, modified, or accessed, and who originally requested the signature.
The world is moving forward, not backward: electronic signatures are the new normal, and as we saw, even emojis can count as legally binding signatures in some cases.
To sign your important documents with confidence, use eZsign, Canada’s best alternative to Adobe, DocuSign, and other popular e-signature platforms.
This article in no way constitutes legal advice. Always consult with counsel for all your legal and contractual questions.
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