Fine Print of Electronic Signatures: Beyond Anderson v. Bell

Last month I wrote about the Utah Supreme Court's opinion in Anderson v. Bell which validated the electronic signatures gathered through a website to support the ballot initiative of a Utah governor hopeful. I summarized the issues under Utah's version of the Uniform Electronic Transactions Act (UETA) that the court analyzed in reaching its decision -- transaction, purpose, narrow exemptions, agreement to engage in an electronic transaction, and general reliability of electronic signatures. Isom on Electronic Signatures and Anderson v. Bell. This summarizes other considerations for creating systems that support valid electronic signatures under UETA that were not raised in Anderson.

ESIGNATURE SYSTEMS VENDORS

There are now several excellent vendors that provide technology systems and support for transactions that either require or are facilitated or even made possible by reliable electronic signatures. The dollar volume of transactions involving electronic signatures is increasing, from consumer purchases to inter-corporate transactions, from intra-company human resources management to foreign trade, from real estate to commodities to consumer goods, from financial and securities transactions to social media. Paired with legal support to assure compliance and enforceability, commerce based upon electronic signatures is coming of age.

DEVELOPING STANDARDS AND BEST PRACTICES

There is remarkably little case law from the decade since ESIGN and UETA were adopted that fleshes out the details of what is required for a legally valid electronic signature. But some additional statutes and regulations have been adopted by states and the federal government to fill in some needed detail, such as the Uniform Real Property Electronic Recording Act (URPERA) adopted in some states and 21 CFR Part 11 (FDA control of pharmaceuticals). And numerous trade groups have developed standards and best practices to help companies in numerous industries create reliable electronic signature systems without repeatedly reinventing the wheel. These standards not only aid in the creation of an electronic commerce system, but give comfort as to the legality and enforceability of the electronic signatures at the heart of such systems.

OTHER UETA CONSIDERATIONS

In addition to the factors above that the Utah Supreme Court analyzed in Anderson v. Bell, the following factors must be considered in assuring compliant and enforceable electronic signatures under UETA.

All of these factors should be considered in light of the overall goal of UETA -- to facilitate electronic transactions governed by state law by making the law uniform among the states and to achieve the speed, efficiency and cost benefits that can be realized through electronic business, commercial and governmental transactions.

- Retention

UETA requires that the electronic data and the signature to which it relates must be capable of retention -- i.e., durability or persistence -- in the following three respects -- (1) the data must be capable of being stored, printed and copied; (2) the data must be able to endure and be accessible long term; and (3) the electronic data must satisfy applicable statutory and regulatory requirements for retention for specified periods. The most practical, cost-efficient and widely known current solution to the durability challenge is migration or life cycle management of data. Numerous companies offer, and even warrant, reasonably durable migration of electronic media.

- Accuracy

The recorded digital information that the signature is certifying must reasonably accurately reflect the underlying information.

- Integrity, Information, Artifacts and Originals

Any system that creates or preserves value, property or assets by documentation must assure that the documentation reliably identifies, defines, distinguishes, preserves and secures those assets. UETA recognizes and legitimizes the fundamental differences between the requirements of a paper system and those of an electronic system to achieve these ends. Thus, UETA recognizes that electronic records may be created (for example, by scanning) from paper records. In a paper-based system, the object – the artifact, the paper itself – is important, and therefore the distinction between an “original” paper and a copy is essential. In a digital system, the concept of “original” is not useful as a way of achieving a workable documentation system, and UETA rejects both the requirement and even the concept of an electronic “original.” In such a system, the paper “original” becomes unimportant, and can even be discarded, so long as the electronic system assures the accuracy and integrity of the data.

- Identity and Attribution

UETA does not change the general legal requirement that, to bind a person and to constitute the act of a person, an electronic signature and electronic record must be “attributable” to the person. Indeed, the intent of UETA is to assure that such attribution rules will be applied in the electronic environment.