Electronic signature and counterparts

When buyer and seller are in different cities, a purchase agreement may be signed remotely. Ontario’s Electronic Commerce Act, 2000 defines an electronic signature as electronic information that a person creates or adopts in order to sign a document and that is in, attached to or associated with the document. Parties may also sign separate copies, or counterparts, of the same document, and a counterparts clause in the agreement can address how those copies are treated. See what a business purchase agreement should contain, and the definitive purchase agreement.

What the statutes say

Under section 11(1) of the Ontario Act, a legal requirement that a document be signed is satisfied by an electronic signature, subject to subsections (3) and (4), which add reliability and method requirements for prescribed documents. British Columbia’s Electronic Transactions Act also provides that a requirement under law for a person’s signature is satisfied by an electronic signature, except that for a record prescribed under section 21(2)(d) the proof of reliability described there must also be present. Alberta’s Business Corporations Act, section 4, says a document or writing required or permitted by that Act may be signed or executed in separate counterparts, with the same effect as signing or executing the original; that section covers documents under that Act only. Each province has its own regime, so confirm which one governs the agreement.

What to check or ask

• Whether every party agrees to sign electronically: the Ontario Act does not require anyone to use, provide or accept a document in electronic form without consent.
• Whether any closing document is one the governing Act does not cover: section 31(1) of the Ontario Act lists documents it does not apply to, and the British Columbia Act has its own list.
• Whether the agreement has a counterparts clause, and what it says about signing separate copies.
• Whether the lender, registry or franchisor will accept the electronic version.