The Changing World of Electronic Signatures

This article was first published in the Springfield Business Journal

Article by Randell Wallace and Don Dagenais

A federal law that took effect about a year and a half ago is changing the world in terms of how legal documents are signed. If it hasn't affected your business already, it probably soon will. The full title of the law is the Electronic Signatures in Global and National Commerce Act, but it has become commonly known in legal circles as "E-Sign."

This statute has changed centuries of legal tradition about what a "signature" is. In addition to a signature being a person's name written in ink on a piece of paper, a signature under this statute now also includes any "sound, symbol or process" that is sent over an electronic medium because it indicates a person's assent and agreement to a communication.

The "sound, symbol or process" could be a spoken voice recording that is sent and received over the Internet, a retinal eye scan, a fingerprint that is sent electronically, a digital signature such a scanned graphic, a private number such as a PIN number, or even simply an e-mail message in which a person types his or her name.

In fact, a signature can be something as simple as clicking on a "yes" button when responding to an offer accessed through a Website or received through e-mail.

The statute validates any legal agreements that are sent via electronic medium, without restriction in the form of electronic medium used. The only requirement is that the document must be in a form that can be retained and adequately reproduced at a later time. This means that any contract that is stored on a computer that can be accessed and printed off to a printer constitutes a legal document under the new law. This would include, for example, a saved e-mail or something that has been turned into a file that resides on a computer's hard drive. Even a deleted e-mail that is "saved" in a trash bin or backup system and later retrieved, could constitute a legally valid agreement if it meets the statute's other requirements.

This law is already changing in dramatic fashion the way in which all sorts of business contracts, including real estate documents, are signed. A contract, agreement, deed, mortgage, lease, or other form of real estate document - or any other business document - can now be sent electronically, signed electronically, and become fully enforceable without being reduced to paper or signed in ink by any person.

Real estate documents...