Electronic Signatures Come of Age

If your company transacts business electronically, you may be concerned about the laws involving electronic signatures.

The Federal Electronic Signatures in Global and National Commerce Act (the “E-Sign Act”) ensures that transactions executed with electronic signatures are considered as good as those with a written signature. Passed in 2000, the law is valid within the United States and all over the world. In addition, several states have enacted the Uniform Electronic Transaction Act (UETA), which also deals with electronic signatures.

So technology is not only part of everyday culture, it’s also part of our legal framework. Here are a couple key provisions of the E-Sign Act:

• No one is required to use an electronic signature. Under the E-Sign Act, a person must consent in order for the electronic signature to be effective.
• An ‘electronic signature’ is defined as the electronic sound, symbol or process attached to or associated with the contract or other record and adopted with the intent to sign the record.

As you can see, the definition is very broad and covers any computer contract requiring the party to Click OK. Under the E-Sign Act, the ‘click’ would be a signature.

So would pressing the ‘pound sign’ in a telephone contract.  The telephone is also an electronic medium since the term ‘electronic’ is defined in the Act as technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

Exemptions
Several categories of documents are excluded from the E-Sign Act including wills, testamentary trusts, adoption documents, prenuptial agreements, divorce and other documents related to family law.

Best advice: Companies targeting consumers online or by telephone must reevaluate their policies and make sure they comply with the E-Sign Act, as well as any state laws. And if your business is global, you must be mindful of various online electronic transaction laws enacted around the world. Consult with your attorney for more information.