Business

What qualifies as an electronic signature?

Apr 15, 2020

Electronic Signatures in accordance with US Law

Electronic signatures, according to the E-Sign Act, have been recognized by all 50 states in the U.S. However, while the E-Sign Act recognizes the validity of electronic records, contracts, and signatures the same as paper counterparts, the E-Sign Act does not specify what qualifies as an electronic signature, due to the fact that Congress chose not to infringe on the states’ traditional right to set the rules for contracts (Adobe). This lack of clarity presents some issues when it comes to the definition of what constitutes a digital signature. The UETA, on the other hand, does have further specifications on e-signatures:

  1. A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.
  2. A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.
  3. If a law requires a record to be in writing, an electronic record satisfies the law.
  4. If a law requires a signature, an electronic signature satisfies the law.

The UETA defines an electronic signature as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” While this may seem vague, officials comment to the UETA that provide guidance as to what is permissible:

“This definition includes as an electronic signature the standard webpage click through process. For example, when a person orders goods or services through a vendor’s website, the person will be required to provide information as part of a process which will result in receipt of the goods or services. When the customer ultimately gets to the last step and clicks “I agree,” the person has adopted the process and has done so with the intent to associate the person with the record of that process.”

Methven & Associates

The actual effect of the electronic signature will be determined from all the surrounding circumstances. However, the person adopted a process in which the circumstances indicate they intended to have the effect of getting the goods/services and being obliged to pay for them. The adoption of the process carried the intent to do a legally significant act; the hallmark of a signature. (MethvenLaw)

In short, if a person accepts the process of signing an agreement, the intent is there and when signed, counts as a legally binding signature. While there’s clarity in this explanation, it does not mean that every state in the U.S has adopted the definition. As of current, according to the National Conference of State Legislators (Uniform Electronic Transactions Act), 47 of the 50 States in the U.S. have signed onto the UETA. Illinois, New York, and Washington are the three states that have not signed on but do have their own statutes pertaining to electronic Signatures:

Still unsure of whether or not your signature is legal? 

The validity of a signature comes from the validity of a contract and more importantly, it’s intent. In court cases, judges would have to determine whether or not the contract is considered valid. In order for an agreement to be considered a valid contract, one party must make an offer and the other party must accept it, and the terms of a contract must be defined for a court to enforce them. In some cases, business people with existing relationships can be considered under contract by simple exchanges of information, such as an email account, as long as it indicates a personal agreement (FindLaw).

Hence, typing your name into an electronic document and agreeing to the terms and conditions of the contract is valid because it shows

  1. the identity of the signature,
  2. the intent of signing, and
  3. the intent of agreeing with the contract.

If you are worried about the enforceability of the contract, it is best to contact an attorney familiar with contracts to recommend the best practices to ensure security when signing electronic documents. And if you are uncomfortable with electronic signatures, don’t worry: the E-Sign Act allows people to choose a paper format as part of their legal rights when faced with the option of electronic contracts.

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