On electronic signatures

Posted by Dan Byler on May 14th 2010 to Liability, Licensing, and Terms of Service

In the news: RightSignature signs Farmers insurance as a client. RightSignature allows users to enter an electronic signature–or a graphical representation of their handwritten signature–into a system. (Contrast with a digital signature, which is cryptographic.) As it turns out, there are several companies that perform similar functions: EchoSign and DocuSign, for instance. One would speculate, given the apparent market for such products, that a digital signature would be legally important. But what is the meaning of “signing” in a digital age?

Remember cases like [ProCD, Inc. v. Zeidenberg] and [Mortenson v. Timberline]? In general, the legal standards for accepting a legal signature are quite low: a checkbox on a website can be legally binding, for instance, and this is recognized across the country. (Some exceptions include fine print issues where user intent to sign is not clear.) Many federal and financial web sites additionally require users to type out their full name as a signature.

But consistency in the law seems lacking. From what I have been able to ascertain, it appears the legal status of electronic signatures varies from state to state. In Delaware, for instance, Section 107(a) of the Uniform Electronic Transaction Act notes that “[a] record or signature may not be denied legal effect or enforceability solely because it is in electronic form.” (To see this play out in the Fifth circuit court, see Berger v. Newhouse and USA v. Rios-Espinoza.)

In Louisiana, the Uniform Electronic Transactions Act “allows electronic signature to satisfy the signature requirement for most legal documents”, although the act only applies to transactions between parties who have “agreed to conduct transactions by electronic means”. (See EPCO Carbon Dioxide Products, Inc. v. JP Morgan Chase Bank, NA.)

Where does this leave us? It seems the law is unclear, and varies from jurisdiction to jurisdiction. Perhaps, before doing business, you should just consult your lawyer. Or… just make sure you get it in writing.

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