Is the Paper Chase Over?

Although commerce is not yet paperless, more and more business is conducted electronically. The statutes and case law are catching up to guide and interpret electronic agreements, including those pertaining to employment. The Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESIGN Act) are intended to ensure the validity of electronic contracts and the defensibility of electronic and digital signatures in all states. In addition, many states, including Utah, Arizona, Colorado, and California, have adopted statutes mirroring the UETA.

As with any contract, courts require that an electronically executed contract demonstrate that the parties understand and agree to the substance and the terms of the contract and intend to be bound. In addition, it must be clear that they intended to sign electronically and to do business electronically. After execution, all parties must have access to the electronically signed document. Also, the parties must keep a record that details how the signature was captured or make a textual statement that can be added to the signed record. Finally, under UETA and ESIGN, a notary may sign and provide other information required by law electronically, fulfilling the requirements for a stamp or a seal.

There are numerous ways to sign a contract electronically that help meet these requirements, including signature capture devices on computers; email validation using pdfs; digital signatures, which combine a public electronic key and a private electronic key to confirm the identity of the signatory; and biometric signatures that use fingerprints or retinal scans. Numerous vendors provide services to validate the legitimacy of electronic and digital signatures.

If you have questions concerning electronic agreements or signatures, please do not hesitate to call your MSEC representative.