Enforceability of Electronic Signatures

Terrence M. McShane

Spencer D. O’Dwyer

McShane, P.C.

 

Friday, January 15, 2021

 

            In the digital age, individuals and businesses frequently rely upon the use of electronic signatures to conduct their business. This has become even more prevalent in the era of social distancing and telecommuting brought about by the COVID-19 pandemic.  A reasonable concern that may have arisen for many is whether these electronic signatures are enforceable.

 

            The federal government and virtually all state governments have answered that question in the affirmative through the enactment of the Electronic Signatures in Global and National Commerce (ESIGN) Act at the federal level and the Uniform Electronic Transactions Act at the state level.  Specifically, the ESIGN Act provides that, with respect to any transaction in or affecting interstate or foreign commerce, “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” and that “a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.”  See 15 U.S.C. § 7001 (a)(1), (2).

 

            Similarly, The Uniform Electronic Transactions Act, as enacted in D.C., Maryland, and Virginia, provides that “[a] record or signature may not be denied legal effect or enforceability solely because it is in electronic form” and that “[a] contract may not be denied legal effect solely because an electronic record was used in its formation.”  See D.C. Code § 28-4906; Md. Comm. Law Code § 21-106; Va. Code § 59.1-489.  Even documents that require notarization may not be denied legal effect if notarized electronically.  See 15 U.S.C. § 7001 (g); D.C. Code § 28-4910; Md. Comm. Law Code § 21-110; Va. Code § 59.1-489.

 

            Therefore, individuals and businesses may in many cases utilize electronic signatures to process transactions and enter into contractual agreements without fear that those agreements will be held unenforceable.  However, it is worth noting that these statutes are not applicable to certain documents, such as wills, codicils, and testamentary trusts, as well as certain transactions governed by the Uniform Commercial Code.  Accordingly, individuals and businesses would be well advised to consult with an attorney in their jurisdiction prior to entering into any transaction or contractual agreement with the use of an electronic signature.

 

            If you require assistance regarding the use of electronic signatures in transactions in D.C., Maryland, or Virginia, contact the attorneys at McShane, P.C.