A Valid John Hancock

By: Bob Goldberg, RSPA General Counsel

The digital age has brought with it a host of new issues regarding the legal effectiveness of certain practices. The Legal Hotline receives regular inquiries regarding the validity of electronic signatures. Today it is possible to work from almost any location and thus there are challenges to routine requirements such as singing a document. Technology has made our work area greater and the world smaller.

Unfortunately, the laws and regulations regarding the necessity of original documents and original signatures varies among documents and jurisdictions. Most jurisdictions do permit documents to be electronically signed and delivered in a manner that make them legally enforceable. One must know these requirements to assure the paper they have is in fact worth the words printed on it.

To address these issues, there are laws on two different levels, state and federal. On the state level, every state other then Illinois, New York, and Washington has enacted some form of the Uniform Electronic Transactions Act (UETA). This law is a set of uniform laws proposed by the National Conference of Commissioners of Uniform State Laws to establish a baseline of what is and is not able to be signed electronically. On the federal level, the Electronic Signatures in Global and National Commerce Act (E-Sign) was passed, in part, to preempt any state laws that were inconsistent with the UTEA, and to ensure a more uniform treatment of electronic documents across state lines.

Both UETA and E-Sign were formulated on the principal that “an electronic record and an electronic signature may not be denied legal effect or enforceability solely because they are in electronic form.” An electronic signature does not have to be a written name to be effective. An electronic signature can be almost anything. Probably the most familiar to us is clicking “Accept” on a webpage or signing with your finger on a touchscreen. The important factor in these actions is making it clear to the signor that the act constitutes acceptance of the agreement.

Generally speaking, UETA and E-Sign apply to all documents except wills, codicils to wills, testamentary trusts, and matters relating to family law such as adoption agreements, separation agreements, and divorce decrees. However, some states have added additional categories of documents that are not permitted to be signed electronically. Among the exceptions are official notices of termination of utility services, documents related to the repossession of property or eviction, recall notices affecting health or safety, documents required to accompany hazardous materials, termination of life or health insurance, documents of title, and documents regarding secured transactions.
Documents requiring notarization present additional issues. There are only eight states that allow electronic signatures for notarized documents. The developing law seems to expand the areas for electronic signatures where the risk is low and eliminating them when the importance of the document is high. What does this all mean for the POS Industry?

A Purchase Order is probably safely executed electronically. Of course, you need to establish your state is not one of the three that have not yet passed appropriate legislation. So, would a Maintenance Agreement, Support Agreement, and a Software License Agreement. However, if the Purchase Order included a personal guarantee one would want to obtain an original signature for that guarantee. Lease documents should bear original signatures. The prudent course to follow is accepting an electronic signature followed by an original signature. In that manner you can never go wrong.