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October 1, 2018
 

What You Should Know About the Laws Surrounding Electronic Signatures

Gone are the days of going on vacation to get away. As technology continues to advance, society has not only become increasingly dependent on the ability to remotely handle routine tasks, but also on the capability to deal with more complicated tasks such as reviewing and signing involved legal documents. The world has definitely gotten smaller, with people expected to be connected and accessible at all times.

In today’s computer-driven world, the requirement to have original documents physically signed and delivered is disappearing. Instead, laws in most jurisdictions now permit documents to be electronically signed and delivered in a manner that still renders them legally enforceable; however, these laws vary from document-to-document and from state-to-state.

To deal with these issues, there are laws at two levels, state and federal. On the state level, every state other than Illinois, New York, and Washington has enacted some form of the Uniform Electronic Transactions Act (UETA), which is a set of uniform laws proposed by the National Conference of Commissioners on 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 (15 U.S.C. § 1701, et seq.) (E-SIGN) was passed, in part, to preempt any state laws that were inconsistent with UETA, and to ensure a more uniform treatment of electronic documents and records 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.”[1] An electronic signature can be practically anything. Probably the most familiar to us is clicking “accept” on a webpage, or signing with your finger on a touchscreen. Practically anything can be deemed an electronic signature so long as the recipient is made aware that the act constitutes acceptance of the agreement.

Generally speaking, UETA and E-SIGN apply to all documents except wills, codicils, 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. For example, Ohio added the following types of documents that cannot be signed electronically:

  • Official notices of termination of utility services, including water, heat, gas, cable television, oil, telephone and power;
  • Documents related to the repossession, foreclosure or eviction of a residence;
  • Recall notices of a product affecting health or safety;
  • Any document required to accompany any transportation of hazardous materials or toxic substances;
  • A letter related to the termination of health or life insurance benefits;
  • Documents of title;
  • Documents related to investment securities; and
  • Secured transaction documents.

In addition to being signed, some documents are required to be notarized, and this raises the question of whether notarization may be accomplished through electronic means. Only eight states currently permit electronic notarization, as such laws have not caught on like the laws permitting electronic signatures. Ohio passed, but then retracted, laws permitting electronic notarization.

It is a certainty that you will be increasingly confronted with requests for your electronic signature, and many of these requests are likely to fall within areas considered “standard and low risk.” However, what is required in order to constitute a valid electronic signature is extremely broad. If you ever find yourself being asked to electronically sign a document you are unsure of, best practices dictate contacting your Vorys attorney to ensure you are not unintentionally creating a legally-binding situation. 

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[1] UETA, Section 7; E-SIGN, 15 U.S.C. §7001(a)(2).


 

Contacts

Victor J. Ferguson
614.464.6227
vjferguson@vorys.com

John F. Furniss III
614.464.5444
jffurniss@vorys.com

David A. Groenke
513.723.4017
dagroenke@vorys.com

Emily S. Pan
513.723.4055
espan@vorys.com

Michael G. Schwartz
513.723.4679
mgschwartz@vorys.com

David A. Swift
614.464.8370
daswift@vorys.com

Mark E. Vannatta
614.464.8295
mevannatta@vorys.com

Suzanne R. Galyardt
614.464.5682
srgalyardt@vorys.com

Karen M. Moore
614.464.6231
kmmoore@vorys.com

Michelle L. Clemons
513.723.4094
mlclemons@vorys.com

Colleen B. Laux
513.723.4067
cblaux@vorys.com

Ronald J. Zmuda
513.723.4018
rjzmuda@vorys.com


 

 

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This alert is for general information purposes and should not be regarded as legal advice. As always, please let us know if you want more information or have questions about how these developments apply to your situation.