Is My Electronic Signature Enforceable?

by Mark E. Ellinghouse

As a transactional lawyer, I’ve always found a special delight when the occasion arises to use one of my favorite sayings: “The pen is mightier than the sword.”  It provides a certain level of self-importance that transactional attorneys enjoy in relatively few circumstances. But in today’s electronic world, where ballpoint pens may soon join VHS tapes and 8-tracks in the trash can, we’ve had to reassess whether that saying still holds water. If no one handwrites agreements, or almost anything for that matter, where does the power go that was otherwise held by the prestigious pen?  Or (perhaps) more importantly, how can parties execute transaction documents without having to resort to printing and physically signing their documents, and can this be done electronically?

Luckily, California has a long history of acceptance of electronic signatures.  Effective January 1, 2000, California adopted the Uniform Electronic Transactions Act (“UETA”).  This statute, which largely tracks the federal equivalent E-Sign Act, provides that a “record or signature may not be denied legal effect or enforceability solely because it is in electronic form.”[1] In other words, e-signatures are valid and binding in California, subject to certain procedural requirements and as long as the contract in question does not fall within one of a few exceptions.  These procedural requirements include:

  1. The parties must have agreed to conduct the subject transaction electronically. This can be determined in writing or by the parties’ conduct, and is determined from the context and surrounding circumstances.  This also includes the requirement that the process by which the contract is electronically signed does not inhibit the ability of the recipient to print or store the electronic record.
  2. The signature must contain symbols or markings that constitute electronic signatures, such as an electronic sound, symbol, or process attached to or logically associated with an electronic record that is executed or adopted by a person with the intent to sign the electronic record.
  3. The signature must be capable of attribution to the signor, which may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable. Again, the context and surrounding circumstances at the time of its creation, execution, or adoption are paramount to determining attribution.

So long as these requirements are met, an electronic signature is binding and enforceable.

Of course, there are some contracts which have been excluded from the statutory protections afforded by the UETA: (1) wills, codicils, testamentary trusts, (2) contracts under parts of the Uniform Commercial Code, and (3) laws that require specifically identifiable text or disclosures be signed and initialed involve contracts that do not fall under the protection of the Cal UETA.[2] Additionally, the following specific transactions do not fall under Cal UETA protection: transactions regarding home solicitation contracts[3], mobile home residency[4], transfers of property subject to blanket encumbrance[5], condominium transfers[6], emergency repair or service contracts[7], home equity sale contracts[8], preparation of a consumer credit report for a lease applicant[9], notice to a former tenant who left behind personal property[10], mortgages (sale, default, publication of sale, disclosures, payment, mortgage foreclosure consultants)[11], commercial and industrial common interest developments[12], and conditional sale contracts in manufactured housing[13].  Most relevant to commercial real estate transactions, any documents which will be recorded, and therefore must be notarized, cannot be signed by electronic signature.

While the circumstances of each transaction must be scrutinized to confirm applicability of the UETA and acceptance of an electronic signature, the widespread application of the UETA and its relatively narrow exceptions should provide comfort to contracting parties that an electronic signature will be valid and enforceable.  Most electronic signature programs, such as DocuSign, fully satisfy the requirements of the UETA.  For any specific questions regarding electronic signatures and their acceptance in a particular situation, please contact me.

 

 

[1] Civil Code § 1633.7(a).

[2] Civil Code § 1633.3(b).

[3] Bus. & Prof. Code § 17511.5; Civil Code § 1689.6.

[4] Civil Code § 798.14.

[5] Civil Code § 1133.

[6] Civil Code § 1134.

[7] Civil Code § 1689.13.

[8] Civil Code § 1695.

[9] Civil Code § 1950.6.

[10] Civil Code § 1983.

[11] Civil Code §§ 2924b-2924c, 2924f, 2924i-2924j, 2937, 2945, 2954.5, 2963.

[12] Civil Code § 6500 et seq.

[13] Health & Safety Code, § 18035.5.