Download - Electronic Records and Signatures
Navigating E-Signature Laws
Presented By Andrei D. Tsygankov, Esq.
About Me• B.S. in Management from Georgia Tech• J.D. from Georgia State University College of Law• Current:
• Partner at Founders Legal® (Bekiares Eliezer LLP)• General Counsel of SmartUp Legal®
• Former:• Managing Director & In-House Counsel for a group of companies that
focused on export management & distribution of goods internationally
What Are E-Signatures?
Earliest Instances of ‘E-Signatures’
The first widely used system for sending signatures across large distances was finalized in 1862!The “Pantelegraph” sent signatures or small drawings over existing telegraph lines. It’s first transmission carried a signature over 80 miles in less than two minutes!This invention came over 10 years before the telephone!
Relevant Laws• Uniform Electronic Transactions Act (UETA)
• Model law drafted by the National Conference of Commissioners on Uniform State Laws• Presented for adoption by individual states in 1999• http://www.uniformlaws.org/Act.aspx?title=Electronic%20Transactions% 20Act
• Electronic Signatures in Global and National Commerce Act (ESIGN)• 15 U.S.C. §§ 7001-7031 (“ESIGN”)• Passed into Federal Law in 2000 • http://www.gpo.gov/fdsys/pkg/PLAW-106publ229/html/PLAW-106publ229. htm
Relevant Laws
• Georgia’s Adoption of Uniform Electronic Transactions Act (UETA) • O.C.G.A. §10-12-1 et. seq.• Became effective July 1, 2009• http://law.justia.com/codes/georgia/2010/title-10/chapter-12 /
ESIGN Act
• States must allow the use of electronic signatures if the parties involved agree to this method of signing.
• Applies to TRANSACTIONS: • In Interstate Commerce • In Foreign Commerce• With the Federal Government
ESIGN Act General Principles
• 1. A signature, contract, or other record related to any transaction cannot be denied legal effect, validity or enforceability solely because it is in electronic form.
• 2. Transaction is defined BROADLY:• Sale, lease, exchange, licensing or other disposition of personal
property, goods, intangibles, services or combination thereof;• Sale, lease, exchange or other disposition of any interest in real
property. 15 U.S.C. § 7006 (13).
ESIGN Act General Principles
• 3. A contract relating to any transaction (in or affecting Interstate Commerce or Foreign Commerce) may NOT be denied legal effect, validity, or enforceability solely because: • An electronic signature or electronic record was used in its
formation. 15 U.S.C. § 7001(a)(2).
ESIGN Act General Principles
• 4. If the law requires that a contract or other record must be in writing to have legal effect, validity or enforceability, electronic form may be denied if:
• Such record CANNOT be retained and accurately reproduced by all parties. 15 U.S.C. § 7001(e).
ESIGN Act General Principles
• 5. ESIGN does NOT require any person to use or accept electronic records or signatures.
15 U.S.C. § 7001(b)(2).• If parties agree to electronic signatures, then ESIGN gives them legal
effect.• In Business-to-Business (B2B) transactions, prior behavior among the
parties can govern acceptance of electronic signatures and records.• In Business-to-Consumer (B2C) transactions, Consumers must have
notice, and must consent.
ESIGN Does NOT Affect
• Substantive protections of consumer protection laws. 15 U.S.C. § 7001(b)(1).
• Content or timing of disclosures required by law. 15 U.S.C. § 7001(c)(2)(a).
• Any requirement by a federal regulatory agency, self-regulatory organization, or state regulatory agency that records be filed in a specified standard. 15 U.S.C. § 7004(a).
ESIGN Does NOT Apply To
• (a) Any contract or record if it is governed by:
• (1) A statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts. 15 U.S.C. § 7003(a)(1).
• (2) A State statute, regulation, or other rule of law governing adoption, divorce, or other matters of family law. 15 U.S.C. § 7003(a)(3).
• (3) the Uniform Commercial Code (UCC), as in effect in any State, other than sections 1–107 and 1–206 and Articles 2 and 2A. 15 U.S.C. § 7003(a)(3).
ESIGN Does NOT Apply To (Cont’d)
• (b)(1) court orders or notices, or official court documents (including briefs, pleadings, and other writings) required to be executed in connection with court proceedings. 15 U.S.C. § 7003(b)(1).
ESIGN Does NOT Apply To (Cont’d)
• (b) (2) any notice of—
• (A) the cancellation or termination of utility services (including water, heat, and power). 15 U.S.C. § 7003(b)(2)(a).
• (B) default, acceleration, repossession, foreclosure, or eviction, or the right to cure, under a credit agreement secured by, or a rental agreement for, a primary residence of an individual. 15 U.S.C. § 7003(b)(2)(b).
ESIGN Does NOT Apply To (Cont’d)
• (b) (2) any notice of—
• (C) the cancellation or termination of health insurance or benefits or life insurance benefits (excluding annuities). 15 U.S.C. § 7003(b)(2)(a).
• (D) recall of a product, or material failure of a product, that risks endangering health or safety. 15 U.S.C. § 7003(b)(2)(d).
ESIGN Does NOT Apply To (Cont’d)
• (3) any document required to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials. 15 U.S.C. § 7003(b)(3).
UETA
• Model law presented to states to codify into state law • Establishes that electronic signatures have the same legal
authority as ‘wet’ signatures• Adopted by 47 states, D.C., Puerto Rico, U.S. Virgin Islands.
Exceptions:• Illinois• New York• Washington
UETA & Reverse Pre-Emption
• States given option to enact UETA substantially as written, or face pre-emption by ESIGN Act
• If state adopted UETA in substantially Model form, the state’s law would prevail over ESIGN
• If a state’s UETA provision is inconsistent with ESIGN, the Federal law would again pre-empt as to that provision.
• O.C.G.A § 10-12-7 • (a) A record or signature shall not be denied legal effect or
enforceability solely because it is in electronic form.• (b) A contract shall not be denied legal effect or enforceability
solely because an electronic record was used in its formation.• (c) If a law requires a record be in writing, an electronic record
shall satisfy the law.• (d) If a law requires a signature, an electronic signature shall
satisfy the law.
Georgia UETA
Georgia UETA
• O.C.G.A § 10-12-12 – Cont’d• (a) If a law requires that a record be retained, such requirement
shall be satisfied by retaining an electronic record of the information in the record which:• (1) Accurately reflects the information set forth in the record
after it was first generated in its final form as an electronic record or otherwise; and
• (2) Remains accessible for the retention period required by law.
Georgia UETA
• O.C.G.A § 10-12-12
• (c) A person may satisfy subsection (a) of this Code section by using the services of another person if the requirements of that subsection are satisfied.
Georgia UETA
• O.C.G.A § 10-12-12
• (d) If a law requires a record to be presented or retained in its original form, or provides consequences if the record is not presented or retained in its original form, that law is satisfied by an electronic record retained in accordance with subsection (a) of this Code section.
Georgia UETA
• O.C.G.A § 10-12-12 – Cont’d
• This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001, et seq., but does not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).
Georgia UETA
• O.C.G.A § 10-12-13 – Cont’d
• Record or signature evidence not to be excluded solely on the basis of electronic format.
Comparing UETA & ESIGN• Georgia’s UETA (O.C.G.A § 10-12-7)
• (a) A record or signature shall not be denied legal effect or enforceability solely because it is in electronic form.
• (b) A contract shall not be denied legal effect or enforceability solely because an electronic record was used in its formation.
• (c) If a law requires a record be in writing, an electronic record shall satisfy the law.
• (d) If a law requires a signature, an electronic signature shall satisfy the law.
• ESIGN (15 U.S.C. §7001(a))
• (1) A signature, contract or other record relating to such transaction may not be denied legal effect, validity or enforceability solely because it is in electronic form.
• (2) A contract relating to such transaction may not be denied legal effect, validity or enforceability solely because an electronic signature or record was used in its formation
UETA vs. ESIGN: Variation by Parties
Georgia’s UETA Parties may privately agree to vary the effects of UETA provisions.
ESIGN Act
No specific language in place that allows parties to privately change provisions of ESIGN.
UETA vs. ESIGN: Consumer Protections
UETA• Very lenient• Enforceability against consumers
determined by actions of the parties, the context and overall circumstances.
• Context, actions and circumstances taken into account when determining if a consumer provided consent.
ESIGN Act
• Consumers must affirmatively consent to electronic records.
• Consumers must be provided notice of their:• Rights to hardcopy records• Rights to withdraw consent and be
provided information on how to do so
• Need to review and store the e-records
UETA vs. ESIGN: Signature Authentication
UETA
• Authentication of a signer’s signature or mark is critical.
• There must be proof that a signature is the mark (or the act) of a person who is supposed to sign.
• Extrinsic evidence may be used in proving this (for example: an IP address; exclusive access or use of an email account, etc.)
ESIGN Act
ESIGN Act does not address how or when signatures need to be
authenticated or attributed to a specific signer.
UETA vs. ESIGN: Transmission & Receipt
UETA
• UETA is lenient on the transmission and receipt of records. Generally,• A record is sent once it leaves control
of the sender.• A record is received when it enters
the system a recipient uses and becomes accessible to the recipient.
ESIGN Act
ESIGN Act does not address how or when a record is considered to
have been sent or when it has been received.
UETA vs. ESIGN: Admissibility in Court
UETA
UETA specifically states that an electronic record and signature is not to be excluded solely on the basis of electronic format.
ESIGN Act
ESIGN Act does not provide specific rules and guidance on
when e-signature and e-records are considered admissible.
UETA & ESIGN
• Georgia’s UETA statutes leave in place all of the restrictions on electronic signatures that are included as part of the ESIGN Act, including (as described earlier in this presentation):• Section 101(c) (15 U.S.C. §7001(c))• Section 103(b) (15 U.S.C. §7003(b))
Written agreement in downloadable, electronic form is valid.
“…agreement is a “written provision” despite being provided to users in a downloadable electronic form. The latter point has been settled by the Electronic Signatures in Global and National Commerce Act (“E–Sign Act”)…”
• Specht v. Netscape Communications Corp. 306 F.3d 17, 2nd Cir. (N.Y. 2002)
ESIGN & UETA in Practice
• Common Hurdles: • NOT validity of electronic signatures themselves, but Issues
of substantive law. For example:
• Did the parties have INTENT to form a contract?• Did all parties have NOTICE (actual or constructive) of
the the transaction terms?• Did all parties give proper CONSENT to the terms?
ESIGN & UETA in Practice
Emails with signature satisfies Statute of Frauds
• Cloud Corp. v. Hasbro, Inc., 314 F.3d 289, 295-96 (7th Cir. 2002) (finding that a sender's name on an e-mail satisfies the signature requirement of the statute of frauds).
ESIGN & UETA in Practice
Receipt of announcement email insufficient to change terms of an agreement
• Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 559 (1st Cir. 2005) (finding that e-mail announcement regarding new dispute resolution policy was insufficient to put employee on notice that the policy was a contract that extinguished the right to access a judicial forum for resolution of federal employment discrimination claims ).
ESIGN & UETA in Practice
Signers must have NOTICE of terms BEFORE accepting electronically
• Labajo v. Best Buy, 478 F.Supp.2d 523 (SDNY 2007) (finding that consumers must be informed of terms of the transaction before signing electronically).
ESIGN & UETA in Practice
Electronic signatures satisfy state law writing requirement• Barwick v. Gov’t Employee Ins. Co., Inc., No. 10-1076, 2011 Ark.
LEXIS 111 (Ark.S. Ct. Mar. 31, 2011). (Affirmation of lower court finding that electronic signature meets the requirement that a rejection of no-fault coverage be “in writing” under state law).
ESIGN & UETA in Practice
Third Party Agent’s electronic signature is validIF authority is given by principal
• Long v Time Insurance Company, 572 F.Supp. 2d 907 (OH 2008) (finding that electronic signature of insurance agent is valid if done on behalf of insured, if the insured had the opportunity to review the application and authorize the signature).
ESIGN & UETA in Practice
Contract terms by ‘Click-Wrap’ agreement are valid
• Metro. Reg'l Info. Sys., Inc. v. Am. Home Realty Network, Inc., 722 F.3d 591, 600-03 (4th Cir. 2013) (finding that, by clicking “yes” in response to electronic terms of use agreement prior to uploading copyrighted photographs, a subscriber signed a written assignment of exclusive copyright ownership in those photographs).
• Bergenstock v. LegalZoom.com, Inc. 2015 WL 3866703 (finding that, clicking “Agree and Place Order” is valid acceptance of terms and conditions, including arbitration provision).
ESIGN & UETA in Practice
Electronic Terms of Service are enforceable if presented to a user-signer together with a
required ‘Sign Up’ button • Fteja v. Facebook, Inc., 841 F.Supp.2d 829 (SDNY 2012)
(finding that consumers must be informed of terms of the transaction before signing electronically).
ESIGN & UETA in Practice
Record integrity & tamper-proof storage is crucial
• Adams v. Quicksilver, 210 Cal App. Unpub. LEXIS 1236 (2010) (finding that a party cannot prove, by preponderance of the evidence, that post-signature alteration of a document did not occur in a system that allowed post-signature alteration of the document).
ESIGN & UETA in Practice
• Common Hurdles: • NOT validity of electronic signatures themselves, but
Admission of electronic records into Evidence:
• AUTHENTICATION• HEARSAY • BEST EVIDENCE
ESIGN & UETA in Practice
• “To meet FRE 901(a) requirements for authentication, the audit trail, signatures and documents must also be secured in a manner that renders the information unalterable without detection”
• Lorraine v. Markel American Ins. Co., 241 F.R.D. 534 (D.Md 2007)
ESIGN & UETA in Practice
• “Organizations must demonstrate to the Court’s satisfaction that they have maintained a secure retrieval process of the audit trail and signed records by which a credible witness can confidently testify.”
• Lorraine v. Markel American Ins. Co., 241 F.R.D. 534 (D.Md 2007)
ESIGN & UETA in Practice
Authentication may be problematic if use of account or medium through which signatures
take place is not exclusive to signer• Kerr v. Dillard Store Services, Inc., 2009 BL 30588 (D. Kan.
Feb. 17, 2009) (finding that mandatory arbitration provision in electronic agreement is unenforceable against employee because supervisor had access to employee’s account and opportunity to sign employee’s name).
ESIGN & UETA in Practice
Enforcing party has burden to show that the agreement was actually signed by party
against whom it is being enforced• Ruiz v. Moss Bros. Auto Group, Inc. 232 Cal.App.4th 836
(2014) (finding, on de novo review, that defendant did not prove by a preponderance of the evidence that plaintiff signed an arbitration agreement that defendant was seeking to enforce).
ESIGN & UETA in Practice
• For admission of electronic records, Counsel MUST:• Establish RELEVANCY • Establish AUTHENTICITY• Resolve potential HEARSAY issues• Comply with the BEST EVIDENCE rules • Demonstrate the absence of UNDUE PREJUDICE
ESIGN & UETA in Practice
• For admission of electronic records, Counsel MUST:• Be prepared to use the same essential rules, techniques and standards to
admit electronic evidence as traditional, non-electronic records; but• To be on the safe side, practitioners should assume that a high standard
for authentication applies, since courts are currently not uniform in how they treat authentication requirements for Internet-based evidence.
ESIGN & UETA in Practice
Code Slide
Reminder for Out of State Participants
Takeaways
• For E-Signatures to be valid and enforceable: • All parties must consent to working together electronically • Terms being accepted must be clearly presented before requiring
signature• All parties must express their consent to the terms being presented• All parties must have an exclusive way to sign or accept terms• All parties must have access to the signed contract, records or data
after signing.• Remember: Retention and Access are crucial for legal effect!
Takeaways
• E-Sign or E-Records System MUST: • Be Reliable • Collect signatures and/or other data in a secure way• Store signed documents, records or other data in a way that makes
tampering impossible or at least very evident• Provide Access to the signed documents, records or other data to all
relevant parties• Provide a clear Audit Trail to overcome signature attribution and
authentication issues
Resolving Client Concerns
• Are E-Signatures legal?• Yes! The ESIGN ACT or UETA is applicable throughout the United States.
• How are E-Signature tools better than fax or scan and email?• The process is easier, faster and more secure than mailed or faxed signatures• Using a reputable E-Signature provider makes electronically-signed
documents easier to find and easier admit into evidence if needed
