More and more people are signing documents electronically, including digital leases, but are these documents legally binding the same way paper copies and ink signatures are?
What happens when you electronically sign a document like a digital residential lease? Is it legally binding like a physical, hardcopy document? A helpful starting point is to look at leases as more than a physical, hardcopy document.
A lease is a contract between a landlord and tenant that contains legally binding promises they make to each other. When we go back to contract law basics, there are key elements that make a contract legally binding. For example, an offer and acceptance (“meeting of the minds”) and certainty of terms. The test for whether a contract exists is whether an objective, reasonable bystander would say the parties entered into a contract.
What the legislation says
The Residential Tenancies Act is not that helpful when it comes to electronically signed residential leases. But there is other legislation and caselaw to help us think it through. In Alberta, the Electronics Transactions Act allows for electronic documents and signatures. However, the Act does not apply to certain documents such as wills, trusts, enduring powers of attorney, personal directives, and guarantees (to name a few). Notice how leases or services and goods contracts are not one of those documents?
The Electronic Transaction Act also covers forming contracts electronically. Unless the parties agree otherwise, they can contract through electronic information or documents. Or they can make a contract by doing something that results in electronic communication. For example, this includes touching or clicking a computer icon or other place on a computer screen. So, electronically signing a document or clicking an “acceptance” button can all mean agreeing to a contract.
What the case law says
The courts also recognize electronic contract formation. For example, in the 2008 Alberta case of Leoppky v Meston, at issue was whether a string of e-mails between the two parties was a contract. In the case, an unmarried couple had bought a home and, upon their split, tried to agree on what to do with their home.
The Court examined key contract elements before deciding the parties had reached an agreement. The Court also looked at whether the contract followed the Statute of Frauds, which says that land sale agreements must be in writing. While the written exchange between the parties was computer generated and in emails, the Court decided that it was enough to meet the Statute of Frauds rules. In other words, the emails were enough to say the land sale agreement was in writing.
There is not much case law that talks specifically about whether an electronically signed tenancy agreement is valid. But in a recent RTDRS case, 21009593 (Re), an electronically signed tenancy agreement was not an issue. In that case, the Tenancy Dispute Resolution Officer noted that:
- The tenant electronically signed the tenancy agreement.
- The RTA does not define “signed” or “signature.” So, the Officer turned to Black’s Law Dictionary for guidance, which says that a person may affix their signature to a document in writing, printing, stamping, typewriting, engraving, etc.
- At no time during the tenancy or after did the tenant challenge the agreement’s validity or deny that he had read it before signing it.
The way of the future
Even if we look at other jurisdictions and the evolution of contracts caselaw, courts consider electronic signatures and digital contract acceptance to be valid. This is so even without specific legislation allowing it. We now live in a time where even a thumbs-up emoji can be a proper way to accept a contract – as in the 2023 Saskatchewan case of South West Terminal Ltd. v Achter Land.
To conclude, think twice before you electronically sign a digital lease or accept a digital contract with the click of a button – like signing a physical contract, it is legally binding today as ever!
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DISCLAIMER The information in this article was correct at time of publishing. The law may have changed since then. The views expressed in this article are those of the author and do not necessarily reflect the views of LawNow or the Centre for Public Legal Education Alberta.