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Enforcing Electronic Signatures in Commercial Contracts – Background, Current Law, and Practice Tips – Part 2
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Enforcing Electronic Signatures in Commercial Contracts – Background, Current Law, and Practice Tips – Part 2

We began our recent discussion about electronic signatures in commercial transactions with some background of the law of electronic signatures and the evolution of the Uniform Electronic Transactions Act in 1999, which was revised and enacted as E-Sign a year later at 15 USC § 7001, et seq.   In this article, we will discuss UETA basics and continue following the law to its present application.

The UETA and its progeny apply when each party to a transaction agrees by some means to conduct their mutual business electronically.  By default, parties who agree to electronic transactions are subject to E-Sign laws, unless the parties elect to opt out. 

According to the commission responsible for the UETA, the limited objective of the UETA was “to make sure that transactions in the electronic marketplace are as enforceable as transactions memorialized on paper and with manual signatures, but without changing any of the substantive rules of law that apply.”

In other words, the UETA was not meant to abrogate the substantive law of contracts, including the requisite offer and acceptance, or bargained-for exchange, and adequate consideration.  Rather, the UETA complemented and expanded existing contract law to give efficacy to electronically finalized contracts.

Some of the most important rules embodied in the UETA are:

  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. An electronic record will satisfy any preexisting law that purports to require a written document.
  4. An electronic signature will satisfy any preexisting law that purports to require a signature.

Forty-seven states have enacted the UETA with minimal variations state-by-state. (Illinois, New York and Washington are the exceptions, but they have enacted their own statutes pertaining to electronic transactions.)  A handy list of the forty-seven states that adopted the UETA, along with links to applicable state laws, are available the National Conference of State Legislatures’ website.

Our next installments in this series discussing the enforceability of electronic signatures will address California’s E-Sign law and practical aspects of authenticating an electronic signature in court.  Check back soon to learn more.

As a commercial litigation and transactions law firm, we consider it inherent in our mission to consider the advantages and disadvantages of applying technology in a commercial environment.  The attorneys at Glass & Goldberg are committed to helping you minimize risk and manage uncertainty, and can help structure your transactions process to meet your goals.

Glass & Goldberg provides high quality and cost-effective legal services and advice for clients in all aspects of business litigation and transactional law.  Call us at (818) 888-2220, email us at info@glassgoldberg.com, or visit us on the web at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.

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