Email as a Method of Signing Agreements

Yesterday, I got a "cease and desist letter" in an email from a lawyer:

"By way of follow-up, please be advised that it is not acceptable under any circumstances for an agreement or document to be executed by the [organization] (or accepted by the [organization]) through an email acknowledgment exchange. 

I trust this practice will cease immediately."

Yes, the irony of a lawyer sending me an email to tell me to stop using emails was not lost on me.

But it got me thinking, "What is the legal standing of an email sign-off?" After all, we use email to convey agreement or disagreement all the time. As a project manager, my client is not always physically available and if I send them an RFP response, a project management plan or a change request, do I really need to go through the trouble of printing it out, sending it to them by courier and then wait up to a week to receive it back again?

Why do we sign documents?

The point of signing a document achieves three things:

  1. We can be assured of the integrity of the document. This is to say, we want to be assured that neither the document nor the signature have been changed from the time they were first joined together. A signed document should be relatively immune to alterations or modifications of either the content or the signature after the fact.
  2. We can be assured of the authenticity of the signature. This is to say, we are reasonably assured that we can match up the person who we think signed the document with th person who actually did sign the document. A signature should prevent or catch forgeries.
  3. We can be assured of non-repudiation of the document. Repudiation occurs when the alleged signer of the document says that he or she never signed the document (it is a forgery), the document was altered after they had agreed to it (fraud), or they did not know or understand what they were signing or they did not intend to sign the document (deception). (Canadian Centre for Court Technology (CCCT)).

Is it possible to satisfy these three conditions without actually having a signer put a pen to a piece of paper and then ship or transfer that same paper to another party to similarly sign it?

Electronic Records

Here in Alberta, there is a piece of legislation called the Electronic Transactions Act (2001). Similar legislation exists in most other provinces.

The Act has a number of exceptions. It can't be used to circumvent the privacy provisions of the Freedom of Information and Protection of Privacy Act, or of the Health Information Act. It doesn't apply to wills, codicils, trust agreements, enduring powers of attorney, personal directives, land and mineral transfers, guarantees, or negotiable instruments such as cheques and bank drafts (for an aside to this last item, ING Direct is experimenting with allowing users to only deposit a cheque image into their account).

That said, what does the Act allow? Well, provided both parties agree, they can conclude agreements using any number of electronic formats: facsimiles (what is that again?), e-mail, encrypted documents, or what have you. The Act is only concerned with the electronic document involved in the transaction, not the software. Documents can include: notes, images, audiovisual recordings, x-rays, books, documents, maps, drawings, photographs, letters, vouchers or papers that are in some way written, photographed, recorded, or stored in any manner (Section 1(1)).

To be deemed a "written document", the electronic form of that document only requires that it be accessible so as to be useable for subsequent reference. Which means that it isn't a document if it is encrypted with a key that no one can use or know, or if it is in a proprietary format or database so that the parties involved can't retrieve it or reference it, or extract it for use in some form for review, reference, arbitration or judgement (Section 11) and that however this document is stored, there exists a "reliable assurance as to the integrity of the information contained in the record" (Section14(2)).

Electronic Signatures

Now here's the beautiful part about this Act: how can I know that you actually signed the agreement when I email it to you? A document can be can be "signed" by an "electronic signature". This electronic signature is defined within the Act as "electronic information that a person creates or adopts in order to sign a record and that is in, attached to or associated with the record" (Section 1(1(c))). This idea of an electronic signature can be used two ways:

  1. An digital signature combines the original electronic document with a cryptographic key reliably assigned only to the signer. The resulting document can be shown to have been unaltered at the time that it was electronically (or digitally) signed, thus preventing the signer from repudiating the signature.
  2. But an email record may also be used as an electronic signature:
    The email envelope or header of the transmission can be used to verify the authenticity of the signer of the record provided that:
    1. The header is retained with the record and can be reliably ascribed to the presumed signatory, and
    2. the signer has also included a block signature within the document to convey in the message that he or she is binding himself or herself to the document, or is "signing" the record. (CCCT)

Some Helpful Advice

In this age of email communication, it's easy for our words to be misunderstood. To avoid accidentally agreeing to something, here are some tips:

  1. If you are agreeing to something, like a change request, a plan, or an attached document, say this explicitly. "I approve the attached change request # 5 and authorize you to extend the project by 2 months and $20,000".
  2. Be explicit in your email. State exactly what you are asking for, or authorizing. Make sure your terms and conditions cannot be mistrued.
  3. Review each email carefully. For example, if Change Request 5 asked for an additional 3 months instead of 2, what is the client actually approving? Make sure that the terms and conditions haven't changed and are consistent throughout the discussion or negotiation.
  4. Don't send an email just as you are out the door for lunch, the end of the day, or the weekend. Rushed emails often include errors and can cause unintended consequences.
  5. State clearly what you are negotiating and try to reflect the other party's point of view. "It appears that we have some disagreement about the duration of this project. I understand that you would like the deliverable to be completed within 6 months, however we feel that an acceptable result will take us 8 months to complete. Is it possible to reduce the scope of the work or hire additional resources to bridge this gap?"
  6. If you want to use the terms of the other party, then state so in your reply; it will be hard for them to repudiate these terms at a later time. "I agree to accept your offer of $20,000 as stated in your email of June 10, 2013".
  7. Use summarizing emails to tie together both sides of an email discussion and consolidating what can be an extensive thread into a capsule. "In summary, it seems that we agree that: I will do a, b, and c, while you will provide x, y  and z".

Disclaimer: I am not a lawyer and the contents of this blog should not be construed as a legal opinion or judgement. Anyone acting on the information or advice contained herein is doing so completely on their own decision and assessment and I take no responsibility whatsoever for any outcome or result of anyone using my opinion herein. I'll leave it to the reader to determine whether the lawyer referenced above or this author is more knowledgable in at least this aspect of the law.