Issues With Electronic Signatures

Issues With Electronic Signatures
  1. A signature is a depiction of someone’s name, mark, seal, emblem, or even a simple “X” or another mark that a person places on documents as proof of identity and intent.

a. Witnesses? Notary?

2. Electronic signature laws provide that an agreement may not be denied legal effect or enforceability solely because it is in electronic form and that if a signature is required, an electronic signature will do. Contracting parties are free to choose which e-signature laws they want to govern their relationship. Telegraph, fax, email, scan, text, click through, third-party provider.

3. The two main sources of law that govern electronic signatures in the United States are:

(a) the Electronic Signatures in Global and National Commerce Act (E-Sign Act) is a federal law that applies to interstate commerce transactions and transactions between US and non-US companies or nations. As the E-Sign Act is based on the concept of federal law preemption (i.e., legal matters that only the federal government can regulate), anything not covered by this federal law is effectively left to the individual US states to regulate.1

(b) the Uniform Electronic Transactions Act (UETA) (to the extent adopted by an applicable state) is a “uniform” or model law which, so far, 49 states, the District of Columbia, Puerto Rico, and the US Virgin Islands have adopted some version. California was the first state to adopt it in 1999. Civil Code 1633.1 et seq. New York is

the only state that has not adopted the UETA but instead enacted similar legislation that in many practical respects resembles some of the key UETA requirements.

4. The E-Sign Act and UETA do not apply to all transactions. The parties must have “agreed to conduct the transaction electronically” in order for the E-Sign Act or the UETA to apply.

5. Excluded transactions generally include the creation and execution of wills and trusts, transactions subject to select provisions of the relevant state’s Uniform Commercial Code and transactions concerning select family matters.

6. The E-Sign Act and the UETA (as adopted by the applicable state) define “electronic signatures” broadly: any sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record. Accordingly, an electronic signature is most likely to be enforceable if it can be shown to have met at least the following three requirements:

7. (i) The signature must be capable of being “authenticated” or “deemed attributable” to an individual person. A signature is attributable to a signer if it was the act of that person. The act may be shown by the context and surrounding facts and circumstances at the time of execution, including by the confirmation of any security procedure, such as entering a password or a PIN, or any two-step authentication method and by providing to the signer an explanation that the use of such password or PIN or second authentication would uniquely identify the signer.

8. (ii) The party using an electronic signature must have “intended” to execute a transaction through that signature and demonstrated an intent to be bound by

the electronic signature, which may be demonstrated by circumstantial evidence such as emails, recorded conversations, or conduct consistent with having intentionally signed the agreement. A written agreement signed electronically may not be enforceable if a party who signed the written agreement did not intend to sign it.

9. The signature must be “logically associated” with the record. Commonly used electronic signature platforms such as DocuSign, SignNow, PandaDoc or HelloSign accomplish this. However, electronic signatures, such as a webpage clickthrough or typed letters at the bottom of an email, are not always embedded in the electronic record. To meet this requirement then, a party would have to show that a signature is tied to the electronic record through, for example, an audit trail.

10. Now how about audio sent digitally? Example an MP3. A voice mail. Did the parties agree to this or is it intended?

11. If there is a claim of non-authenticity (it wasn’t me who signed via electronic), no authorization (it wasn’t me who sent it), common law defenses may be applicable. For example truth, ratification, waiver, estoppel, authorization.

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