Contract signed via DocuSign: three key points to remember from a recent decision of the Court of Québec

The use of electronic signatures is constantly growing and is now part of our daily professional lives. This growth was accelerated by the pandemic context in which we continue to assist our clients in their transactions remotely. As a result, we have closed contracts with clients located around the world.

Notwithstanding its undeniable convenience, it is important to question the validity of an electronic contract – is it a secure process and what are the risks associated with it?

The Bennington Financial Corp. v. Dufour decision

On September 29, 2022, in the matter of Bennington Financial Corp. v. Dufour[1] (the “Decision”) the Court of Québec (the “Tribunal”) recognized the validity of a contract signed through the DocuSign platform. The plaintiff, Bennington Financial Corp. (the “Plaintiff”), claimed from the defendant, Mr. Claude Dufour (the “Defendant”), the execution of a contract of suretyship (also known as a guarantee agreement) signed via DocuSign[2]. The Defendant, on the other hand, claimed, among other things, that there was defect of consent and that the contract was invalid[3].

In this case, the Tribunal unequivocally recognized the validity of the contract of suretyship signed electronically. Indeed, in the words of Judge Henri Richard:

“Les documents transmis via la plateforme DocuSign ne font aucun doute quant à leur intégrité et aux signatures […][4]“.

English translation: Documents transmitted via the DocuSign platform leave no doubt as to their integrity and the signatures […].

This Decision is an interesting illustration of the use of electronic signatures in Québec contract law.

Here are some highlights to take away from the Decision:

In principle, electronic signatures are permitted

Subject to the exceptions discussed hereunder, a contract may be signed by electronic means. Section 2827 of the Civil Code of Quebec[5] (“CCQ”) broadly defines the notion of signature as follows:

“A signature is the affixing by a person, to a writing, of his name or a mark distinctive to him which he regularly uses to signify his consent.” [Our underlining for emphasis]

Thus, it is not mandatory that a signature be handwritten[6]. Moreover, electronically signed contracts are governed by the Act to establish a legal framework for information technology[7] (the “Act”). One of the objectives of the Act is to achieve functional equivalence in the legal value of documents, regardless of the media used[8]. The Act does not prescribe the use of any specific platforms for electronic signatures, but rather establishes criteria to ensure the legal value and integrity of documents signed through technological means.

In the Decision cited above, the Tribunal recognized the legal validity of the electronic contract based on sections 2837 to 2840 of the CCQ as well as the Act[9].

The integrity of an electronic contract must be ensured

The integrity of an electronically signed contract must be ensured for it to have the same legal value as a handwritten contract[10]. More specifically, it must be possible to verify that it has not been modified after being signed, that it is complete, and that the technological support used ensures its stability and durability[11]. For example, the DocuSign and ConsignO Cloud – Notarius platforms allow for the verification of these elements through the production of certificates of authenticity and audit logs.

To facilitate proof of electronically signed contracts, section 2840 CCQ provides a simple presumption of integrity regarding the technological medium used. Thus, it is up to the person challenging the validity of the technological medium to demonstrate by preponderance of evidence that the integrity of the contract has been undermined[12].

Moreover, if the technological medium used does not ensure the integrity of the document, the latter may still serve as a commencement of proof and be admitted as testimonial evidence and/or real evidence[13].

In this case, the Plaintiff produced a “certificate of completion” from the DocuSign platform demonstrating that the Defendant received, viewed and signed the contract of suretyship[14]. This certificate was ultimately used to ensure the integrity of the document, and the Defendant did not prove that there had been an integrity breach. The Tribunal also concluded that the fact that the contract was signed by different persons at the same IP address does not cast doubt on its integrity[15].

The facts surrounding the electronic signature are relevant.

Akin to a contract signed by hand, the facts surrounding an electronic signature also carries weight in the assessment of the evidence.

In this case, the Tribunal took into consideration several facts that helped demonstrate that the Defendant had indeed consented to the contract. In particular, the latter transmitted his personal information to the Plaintiff, signed a request for authorization to perform a credit check, and acknowledged via email communications that he received and signed the contract[16]. The Tribunal also found it incongruous to conclude that the contract is invalid since the Defendant admitted to having received the equipment under contract and made payments for it in the past[17].

Beware of exceptions

The law provides for exceptions where electronic signature is either prohibited or more strictly regulated. This is notably the case for authentic acts executed before a notary, which currently benefit from a special authorization from the government allowing their signature through technological support[18]. These authentic acts must be signed via the ConsignO Cloud Notarius platform and must comply with the procedures prescribed by the professional order of notaries, the Chambre des notaires du Québec.

It is also possible that the use of electronic signature may be refused or limited by one of the contracting parties, and that a handwritten signature may be requested. This is sometimes a requirement for mortgage lenders in the execution of financing documents.

Finally, signing a document electronically does not relieve the attorney of his/her obligation to verify the identity, quality and capacity of the signatory when required by law or by contract. Notaries, for example, must continue to exercise great vigilance when signing authentic acts through technological support to mitigate the risk of fraud, identity theft, incapacity, and coercion[19].

Conclusion

In conclusion, electronic signatures are valid and safe, to the extent that they are permitted by law and that secured technologies are used.

Consequently, it is important to validate with your legal counsel if the current legislation and regulations and/or the circumstances specific to your situation allow you to sign a document electronically.

By Mélissa Dion

[1] Bennington Financial Corp. v. Dufour 2022 QCCQ 6420

[2] Id., paragraph 1.

[3] Id., paragraph 2.

[4] Id, paragraph 18

[5] Civil Code of Québec (chapter CCQ-1991)

[6] Section 39 Act to establish a legal framework for information technology (chapter C-1.1).

[7] Section 2837 CCQ

[8] Section 1, paragraph 3 Act to establish a legal framework for information

[9] Bennington Financial Corp. v. Dufour, paragraphs 16 and 17.

[10] Section 2838 CCQ

[11] Section 2839 CCQ and section 6 Act to establish a legal framework for information

[12] Section 2840 CCQ

[13] Section 2839 alinea 2 and 2865 CCQ and section 5 alinea 3 Act to establish a legal framework for information

[14] Bennington Financial Corp. v. Dufour, paragraph 14.

[15] Id, paragraph 20.

[16] Id, paragraphs 19 and 20.

[17] Id, paragraph 23.

[18] Order No. 4841 of the Minister of Justice adopted on 24 August 2022, adopted in accordance with section 5.1 of the Act respecting the Ministère de la Justice (chapter M-19)

[19] Section 43, paragraph 1 Notaries Act (chapter N-3)