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  • Aug 24, 2016

    IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog has been provided by Lindsay Smith of the Pacific Northwest Law Group (www.pnwlg.com).

    E-Signatures – Are They Enforceable?

    For many people, especially those of us in the tech-savvy Puget Sound business community, electronic signatures (“e-signatures” which are different from e-cigarettes) are provided more often than a pen-written signature. Those who choose to use these e-signatures often do so as a matter of convenience. Simply digitally signing a digital document and sending it out is easier than the printing, signing, scanning, and emailing required with paper and pen signatures.

    Some of our clients and colleagues have asked us about e-signatures and their enforceability. Within this article we hope to provide some basic information about e-signatures.

    An e-signature may be a digital copy of your written signature that you attach as part of a drafted document. Digital signatures also include use of a digital service that allows you to sign documents with a stylus or mouse. No matter the method of e-signature, there are two main laws that impact e-signatures in the United States:

    Electronic Signatures in Global and National Commerce Act (“ESIGN”)
    Passed in 2000, ESIGN requires that a contract or agreement may not be deemed unenforceable or denied validity due to being signed using an e-signature.

    Yes, But…. Uniform Electronic Transactions Act (“UETA”)
    The UETA is not a federal law, but has been adopted by most states (but not Washington). These state laws allow the use of electronic signatures in private and government contracts.

    To be valid under ESIGN and UETA an e-signature and the surrounding circumstances must show:

    1. Intent – e-signatures are only valid if the signer intended to sign.
    2. Consent – the parties to the transaction must consent to doing business electronically.
    3. Association of Signature – the system used to capture the signature must keep an associated record that reflects the process that created the signature or graphic statement providing it was executed by an electronic signature.
    4. Retention – electronic signature records must be capable of retention and accurate reproduction for reference by all parties.

    Not All Documents. Not every contract or agreement may be signed by an e-signature. In most states you cannot sign estate planning documents, dissolution of marriage documents, or adoption documents using e-signatures. However, more and more states are enforcing various types of agreements with e-signatures. Importantly, not all countries enforce e-signatures. It is important to determine whether an e-signature is enforceable in a foreign country prior to accepting an agreement signed by an e-signature by someone outside of the United States.

    We hope that this information is helpful for those people seeking a greater understanding of e-signatures and their enforceability. That said, this article does not provide legal advice for a specific set of circumstances.

    If you have questions related to any of the legal implications affiliated with signing a document with a digital signature Lindsay Smith would welcome the opportunity to discuss the situation with you. Ms. Smith can be reached at (425) 867-0512 or lindsay@pnwlg.com.

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