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You Can Be ESIGN and UETA Compliant and Still End up in Court

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By Jonathan R. Tung, Esq. on January 14, 2016 1:01 PM

Electronic signatures have quickly become the predominant means of closing a deal, although it would be a mistake to believe that all digital signatures are made the same.

Under basic application of business contract and evidence rules, one could say that electronic signatures are really not that "toothier" than their paper counter-parts. At least this is the current law under Federal ESIGN and state UETA laws.

ESIGN and UETA

In basic jargon, both the federal ESIGN law and the state UETA laws essentially give a nod to electronic signatures by recognizing that they are even signatures. Under UETA, no contract can be denied enforceability simply because it was signed electronically. But again, in-house counsel should not take this to mean that electronic signatures are somehow granted special status, because they aren't. They're simply given status.

You Could Still End up in Court

If your contract case ever ends up in court, chances are summary judgment was denied because there were disputes over the surrounding circumstances in which the signature was rendered electronically. After all, anyone can type the words "John Doe." A physical signature, believe it or not, has on its face many more characteristic safeguards against fraud. Physical signatures still have a place in society and business.

Surrounding Circumstances

Like any other evidentiary issue, the signature gets down to likelihood and preponderence. Fortunately, electronic signatures these days are much more traceable than they have been in years. These days, electronic signature cases settle faster (or are enforced against the signor) much more not because of the ESIGN/UETA laws, but because the surrounding evidentiary traces left behind by the signor. In other words, compiance with laws alone will not save the day.

How?

There are a number of companies that specialize in the service of ESIGN/UETA compliance and also tracing electronic cookie-crumbs left by the signors. The offeree will sign on relatively neutral ground that's compliant, but also with eyes wide open.

The grand takeaway is to understand that compliance with federal and state laws regarding the status of electronic signatures will not keep you or your company out of court -- best practices and due diligence will.

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