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Sign on the Electronic Line

As more and more business is conducted electronically, parties more often use keystrokes instead of pens to sign contracts and other legally binding documents. There’s even a federal law that covers this  — the Electronic Signatures in Global and National Commerce Act (E-Sign) (15 USC §§7001-7031)  — which confirms the ability of parties to contract electronically. Here’s what you need to know about signing on the electronic line. 

At common law, any symbol made with the intent to sign a document could qualify as a legally valid signature. The definition of “signed” in the Uniform Commercial Code includes “any symbol,” as long as it is “executed or adopted with present intention to adopt or accept a writing.” UCC §1-201(37). E-Sign takes this same approach and extends it to electronic signatures by requiring that an electronic signature need only have the following three elements (15 USC §7006(5)):

  • A sound, symbol, or process,
  • Attached to or logically associated with an electronic record, and
  • Made with the intent to sign the electronic record.

E-Sign provides that any signature, contract, or other record cannot be denied legal effect, validity, or enforceability solely because it is in electronic form (15 USC §7001(a)(1)), and any contract cannot be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation (15 USC §7001(a)(2)). 

Because E-Sign does not require anyone to agree to use or accept electronic records or electronic signatures (15 USC §7001(b)(2)), be sure to include an electronic signature provision in your agreements if you want them to be used.

An electronic signature is not made in one particular way. In fact, they can take many forms and be created by many different technologies. Examples of electronic signatures that should qualify under E-Sign include:

  • Typing the sender’s name at the end of an e-mail message sent by him or her;
  • Including a digitized image of a handwritten signature attached to an electronic document;
  • A mouse click (e.g., on an “I accept” or “I agree” button); and
  • A “digital signature” (e.g., a signature created through public key cryptography).

There seems to be a trend toward a liberal interpretation of what it means for a party to have “signed” something. For example, a New York court held that a series of e-mails were “signed” writings sufficient to modify an employment agreement that contained a clause requiring all amendments to be signed. Stevens v Publicis (App Div 2008) 854 NYS2d 690 (.pdf). To avoid slipping into an agreement without realizing it, consider including a contract provision specifying that a typed name or exchange of e-mails is not sufficient to satisfy the requirement that any amendment must be signed by the parties.

For more on E-Sign, including the consumer protection and electronic document retention features of the law, check out CEB’s Internet Law and Practice in California.

© The Regents of the University of California, 2011. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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