Tag Archives for " Electronic Signatures in Global and National Commerce Act "

Electronic Signatures

electronic_signature

An electronic signature is an “electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” In simpler terms, it is a signature that you can use electronically, either by inserting a preformatted signature into a document, or by using a third-party tool that allows you to sign something from your computer.

Electronic signatures are legally binding in most business and personal transactions in almost every country in the world.

There are clear advantages to electronic signatures over "pen on paper" signatures.  Even for traditional "brick and mortar" law practices, electronic signatures dramatically cut turnaround time for documents, and they eliminate the hassle of dealing with paper, printers, scanners, postal services, and couriers.

For my practice, the ability to use electronic signatures is essential. I am a "digital nomad" and when I require a signature on a document, I am just as likely to be in Costa Rica or Singapore as I am to be in Scottsdale, Arizona. I am able to get a document signed by multiple parties, each of whom might be on opposite sides of the globe, within minutes, without leaving my desk. 

We utilize the "Docsketch" electronic signature system which fully complies with:

  • The Uniform Electronic Transactions Act, also known as UETA of 1999;
  • The Electronic Signatures in Global and National Commerce Act, which is commonly known as the ESIGN Act of 2000; and 
  • The EU Electronic Identification and Authentication Services Regulation (910/2014/EC), commonly referred to as eIDAS, which took effect on July 1, 2016 and replaced both EU Directive on Electronic Signatures 1999/93/EC and other EU member state laws that were inconsistent with eIDAS.

Each of these acts reinforces the validity of electronic agreements. According to the ESIGN, for example, a contract “may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation." In Arizona, as in at least 46 other states that have also adopted the UETA, electronic signatures are recognized the same way as “ink” signatures if they meet the requirements of the UETA. (*Click HERE for a boring discussion of the details of these requirements).

Docsketch allows us to not only collect digital signatures but also to authenticate each signature, including recording the time and date when the electronic signature is provided, recording the IP address of the signatory, and recording the email address utilized by the signatory to provide the digital signature. These precautions ensure the signature can be defended against any challenge of authenticity.

If and when you receive a document to be signed, you will be guided through the simple steps required.

Under the UETA, an “electronic signature” must consist of “an electronic sound, symbol or process … executed or adopted by an individual with the intent to sign the record.” Simply using email to communicate and transmit documents does not trigger the UETA. The UETA does not supplant common law principles of contract formation. The circumstances surrounding the electronic signature must show that it was adopted with an intent to do a legally significant act. The UETA still retains the logical common law rule that a signature is only valid if the signer intends to sign something.

Also, the electronic signature must be “linked to, or connected with, the electronic record being signed.” (UETA § 2, official cmt. 7). The official comments to the UETA illustrate the concepts in play. “In the paper world, it is assumed that the symbol adopted by a party is attached to or located somewhere in the same paper that is intended to be authenticated, e.g., . . . the classic signature at the end of a long contract.” UETA § 2, official cmt. 7. In the digital world, such “tangible manifestations do not exist.” Id. Thus, the record or documents attached to an email need to be logically associated with an electronic signature to evidence a similar level of connection.

Finally, the UETA applies only when the parties to a transaction have agreed to conduct it by electronic means. A.R.S. § 44-7005(B). Parties, however, do not have to expressly agree for an electronic signature to be effective. The UETA allows consent to be implied by the actions of the parties in transacting electronically. Whether the parties impliedly agree to conduct a transaction by electronic means will be determined from the context and surrounding circumstances of the transaction, including the parties’ conduct. Therefore, where parties have been negotiating a contract only through email correspondence or have agreed to all of the terms over email, the courts will more likely find the parties have impliedly agreed to transact under the UETA.