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Enforcing Electronic Signatures in Commercial Contracts – Background, Current Law, and Practice Tips
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Enforcing Electronic Signatures in Commercial Contracts – Background, Current Law, and Practice Tips – Part 3

We’ve recently been discussing the use of electronic signatures in commercial transactions, including federal enactment of the E-Sign act, which grew out of the Uniform Electronic Transactions Act, basic tenets of the federal E-Sign law, and adoption of the law by forty-seven states and some U.S. Territories.   This article will review California’s E-Sign law, and our next article will highlight practice tips when it’s necessary to prove electronic signatures.

California was the first state to adopt the UETA as state law in 1999, now found in California Civil Code sections 1633.1-1633.17, and referenced in the California Commercial Code at Section 1108

Like the E-Sign act, California’s E-Sign law excepts certain areas of substantive law.  California’s E-Sign law, however, creates more exceptions, evidencing the State’s pro-consumer public policy concerns.  A complete list of exceptions to California’s E-Sign law can be found in Section 1633.3, but some of the notable exceptions are:

  • The title does not apply to California laws governing the creation and execution of wills, codicils, or testamentary trusts.
  • The title does not apply to UCC Division 1, except Sections 1107 and 1206.  (Allowing E-Sign to cover Sections 1107 and 1206 allows real estate transactions to be electronically conducted.)
  • The title does not apply to UCC Divisions 3, 4, 5, 8, 9, or 11, which address negotiable instruments, bank deposits, letters of credit, investment securities, secured transactions, and funds transfers, respectively.
  • The title does not apply to any law that requires specifically identifiable text or disclosures in a record or a portion of a record be separately signed (including initialed).  Sections 1677 and 1678 of the Civil Code and 1298 of the Code of Civil Procedure are the exceptions to this exception; otherwise, real estate contracts could not be entered into electronically.

As noted above, a complete list of exceptions to California’s E-Sign law can be found in Section 1633.3, but many of the areas of exception deal specifically with instances where electronic notice is not sufficient.  Since the focus of our current articles is electronic signatures, their permissibility and enforceability, we will leave further discussion of electronic notices for another set of articles.

Businesses must change and adapt to emerging technologies to stay on the leading edge of industry trends.  If you conduct business in an area not specifically addressed by state or federal E-Sign law, or your business transactions overlap more than one area of law, you should seek a professional opinion regarding the enforceability of electronic signatures in your business transactions.

Our next and final article in this series will address practice tips for proving the existence of an electronic signature in a breach of contract context.  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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