CT & Federal Laws Regarding the Electronic Transaction Act
Dec. 7, 2022
In today’s world, many individuals and businesses have switched from traditional, paper-and-ink documents to digital versions. Electronic contracts and electronic signatures are widely used in both the business and real estate worlds. While e-contracts and e-signatures are so common, many people do not understand the federal and state laws regarding the Electronic Transaction Act, which governs transactions in electronic commerce.
At DeChello Law Firm LLC, our skilled attorneys represent individuals and entities in business and real estate transactions in North Haven, Connecticut, and throughout New Haven County. We assist clients with all contact and transaction matters, including e-contracts and e-signatures.
Are E-Contracts/E-Signatures Valid?
The short answer is, “Yes, e-contracts and e-signatures are valid” thanks to the Electronic Transaction Act, which granted electronic contracts the same legal status as paper-and-ink contacts.
An electronic contract (e-contract) is an agreement created between two or more parties and signed electronically. When creating an e-contract, no paper or ink is used.
An electronic signature (e-signature) is an electronic expression of a person’s willingness to enter into a contract or agree to the terms of a particular document.
Is an e-signature to sign a contract valid? Yes. However, as with traditional, handwritten signatures, e-signatures are not valid if either party does not intend to adopt the terms associated with the signature. To be valid, the e-signature must be directly associated with the record being signed. In addition, e-signatures are valid as long as specific disclosures are made to the parties who intend to use their electronic signatures.
E-signatures can take many forms, including clicking on the “Agree” or “Accept” button, typing one’s name, or pasting a scanned version of one’s signature into the signature area.
Electronic Transaction Act
The Uniform Electronic Transaction Act, which is commonly referred to as UETA, was adopted by nearly every state in the U.S. Congress passed the UETA in 1999. The UETA gives electronic contracts (e-contracts) and electronic signatures (e-signatures) the same legal effect as traditional paper-and-ink contracts and signatures.
The subsequent year, in 2020, Electronic Signatures in Global and National Commerce Act – the so-called ESIGN Act – was passed as a federal regulation to resolve disputes regarding the validity of e-signatures. The ESIGN Act requires states to have laws in place that would validate electronic signatures.
Connecticut is one of many states that passed the Electronic Transaction Act and adopted laws that validate e-contracts and e-signatures.
Are E-Signatures Legally Binding Outside of the U.S.?
Electronic signatures are not legally binding in all countries. Whether or not an e-signature is valid depends on the country. Each year, an ever-increasing number of countries adopt laws that recognize the legal status of electronic contracts and signatures and govern their use – similar to the Electronic Transaction Act in the U.S.
Which Documents Cannot Be E-Signed?
Even though e-contracts and e-signatures are widely used by individuals and businesses across the world, some legal documents cannot be e-signed. Examples of documents that must be signed traditionally – using paper and ink – include:
Wills, testamentary trusts, and codicils
Documents related to family law matters, including divorce
Court documents, including court orders, pleadings, motions, and notices
Notices of termination/cancellation of utility services
Notices of termination/cancellation of life or health insurance benefits
Notices of eviction, foreclosure, repossession, or default
Notices of product recalls that affect safety or health
Documents required for transportation of hazardous materials
All of these documents are specifically excluded from the ESIGN Act. However, some state laws may allow e-signatures for some of these documents under certain circumstances, which is why you’ll need to consult with a knowledgeable attorney before considering e-signing one of the documents mentioned above.
Requirements of an E-Contract/Signature
There are many things to consider when creating an electronic contract because the tiniest mistake could invalidate the document. There are strict requirements that must be followed when drafting e-contracts. But what is required to make an e-contract valid? A valid e-contract must contain the following elements:
Offer. One party must exchange something of value for what the other party is willing to offer.
Consideration. This element refers to the benefit each party receives for entering into the contract.
Acceptance. Each party must accept the offer.
Intention. All parties to the contract must agree to create a valid agreement.
Capacity. All parties must have the legal capacity to sign the e-contract.
When signing an e-contract, the parties can use any symbols, marks, or letters that show their willingness to enter into the contract. This is known as the e-signature.
Experienced Guidance You Can Trust
The federal and state laws regarding the Electronic Transaction Act and everything that has to do with e-contracts and e-signatures can be complicated. At DeChello Law Firm LLC, we help clients in the business and real estate worlds protect their rights when drafting/signing e-contracts and using e-signatures. Reach out to our office in North Haven, Connecticut, for the legal guidance you need.