Validity of Electronic Signatures

It is commonly assumed in the United States that electronic signatures have the same effect as wet signatures. And for the most part, they do. However, electronic signatures may not hold up in some circumstances.  

Federal legislation, specifically the Electronic Signatures in Global and National Commerce (ESIGN) Act, and the law of practically every state, broadly defines electronic signature as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” This essentially means that an enforceable electronic signature requires these things:

• connection between the signer’s signature and the “record” (i.e., contract, agreement, document at issue),
• the signer’s agreement to participate in the transaction electronically,
• the signer’s intent to accept or execute that record.

Consider these circumstances:

Party A sues Party B. Party B ultimately agrees to settle the lawsuit after years of litigation. The Parties are directed by the judge presiding over the lawsuit to craft the terms of the settlement out of court. Through the exchange of numerous e-mail messages, Party A and Party B attempt to agree to specific settlement terms. Finally, after negotiating back and forth over e-mail, Party A sends an email to Party B with an attachment of his finalized offer for settlement terms and stating within the email: “This is my final offer. Let me know your decision. It is a done deal when you sign.”

The attached offer lacks a signature line/signature block and Party A’s signature. 

Party B responds with an email stating “Looks great to me—Party B.”

Party B never intended to sign electronically the attached settlement terms through the printing of his name in his email. Nonetheless, Party A walks away thinking Party B electronically signed off on his proposed settlement terms by providing his name at the end of his e-mail, whereas in Party B’s mind, he did no such thing.

The Parties go to court—again—to argue over the validity of Party B’s electronic signature.

Such circumstances, while fabricated, resemble real-world scenarios and illustrate the potential pitfalls of electronic signatures. To avoid these headaches when signing electronically, be sure there is clear, documented consent to conduct the transaction by electronic means and evidence of intent to electronically sign the record.  One sure-fire method for confirming the signer’s intent to sign electronically and link signatures with the record is by securing digital signatures through digital signature tools like DocuSign eSignature.  While less secure, an alternative method is requesting and providing scanned signatures through tools like Adobe Acrobat.