The use of e-signatures is ubiquitous in the marketplace. The federal ESIGN Act (2000) and Uniform Electronic Transactions Act (UETA) essentially provide that an electronic signature is valid law if:
The party intended the electronic signature to be valid.
The parties to the transaction consent to the use of electronic signatures.
The system utilized keeps an associated record that reflects the authentication.
The transaction is retained for reproduction by all parties.
Minnesota UETA. Minnesota has adopted the Uniform Electronic Transactions Act, which is contained in Chapter 325L of the Minnesota Statutes. Minn. Stat. § 325L.06 states that UETA must be construed and applied to “facilitate electronic transactions.” Minn. Stat. § 325L.07(a) states that: “A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.” Minn. Stat. § 325L.13, entitled “Admissibility in Evidence,” states that: “In a proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.” Minn. Stat. § 325L.09(a) states that, “An electronic record of electronic signature is attributable to a person if it was the act of the person,” and that the act may be shown in “any manner.”
This Party Certificate. That said, some electronic signatures may be “better” than others. One issue relates to third-party certificates. A third-party certificate is an authentication of the electronic signature. Obtaining a certificate may help “prove” the authenticity of the signature.
Audit Trails. Another issue relates to the audit trail. The audit trail can show when the document was signed and what server was used to sign it. Unfortunately, some companies don’t use an audit trail, which undermine the ability to show the authenticity of the signature. In IO Moonwalkers, Inc. v. Bank of America Merchant Services, 814 S.E.2d. 583 (N.C. Ct. App. 2018), the merchant denied signing a document with an e-signature. The bank then produced an audit trail from DocuSign to show the date and time that sometime used the e-signature. The court ruled in favor of the bank because it had the audit trail. Had an audit trail not been produced, the court likely would have ruled the other way. See also Newton v. American Debt Services, Inc., 854 F.Supp.2d 712, 731 (N.D. Calif. 2012) (court found that consumer who disputed signing contract had actually signed it after debt settlement company testified that it sent the contract to the consumer using DocuSign and that it was signed in the client portion and received back from her, and an identifying code was assigned above her signature.)
Regulatory Compliance. Another issue relates to regulatory compliance. In In Re Mayfield, Case No. 16-22134-D-7 (Bankr. E.D. Cal. Jul. 15, 2016), the bankruptcy court imposed sanctions on a lawyer who allowed a client to use a DocuSign signature when the rules required a “wet” (original) signature. The court noted that electronic signatures can be forged or usurped, leading to unnecessary disputes over the validity of important documents.
Knowing Consent. Finally, there is the issue of intent. At least seven studies have found that electronic signatures evoke markedly different psychological reactions than “wet” or original signatures. The recipient of an electronic signature is more skeptical of the contractual commitment than one who receives a hand signature.[1] More important, people who apply an electronic signature generally are more prone to inaccuracies (i.e. to cheat) than when the same person applies a hand signature.[2] Indeed, psychologists believe that the highest form of integrity is when a contract is signed before a notary public. In contrast, the e-signed document has no physical signature at all.
Psychologists believe that a person’s unique handwritten signature is a symbolic extension of the self, in contradiction to e-signatures, which are more transient. Psychology studies go so far as to say that the criteria of honesty and integrity vary as to whether the signatory is using a wet signature, a checkbox, a PIN, or simply typing one’s name (/s/ Mike Hatch)
E-signatures provide convenience in the modern marketplace. Having said that, if the transaction has high risk or high dollars, or if there are concerns about follow-through or integrity of the signatories, or if there are concerns about binding a particular individual within a company, then strong consideration should be given to old-fashioned original signatures. The fact that notaries still exist in this digitized era exemplifies residual concern for the authenticity of signatures in the marketplace.
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Lori Swanson served as Attorney General from 2007 to 2019. Prior to that, she served as Solicitor General of the State of Minnesota and Deputy Attorney General. Mike Hatch served as Attorney General from 1999 to 2007. Prior to that, he served as Commissioner of the Minnesota Department of Commerce. Hatch and Swanson practice law at Swanson Hatch, P.A. They may be reached at 612-315-3037. Visit their website at www.swansonhatch.com.
www.swansonhatch.com
431 South Seventh Street, Suite 2545
Minneapolis, MN 55415 612-315-3037
The materials in this article are for informational purposes and do not constitute legal advice, nor does your unsolicited transmission of information to us create a lawyer-client relationship. Sending us an email will not make you a client of our firm. Until we have agreed to represent you, nothing you send us will be confidential or privileged. Readers should not act on information contained in this article without seeking professional counsel. The best way for you to inquire about possible representation is to contact an attorney of the firm. Actual results depend on the specific factual and legal circumstances of each client’s case. Past results do not guarantee future results in any matter.
[1]MChou, “Paperless and Soulless: E-signatures Diminish the Signor’s Presence and Decrease Acceptance,” 60 Journal of Experimental Social Psychology 26 - 50 (2014). [2]Chou, “What’s in a Name? The Toll e-signatures Take on Individual Honesty,” 61 Journal of Experimental Social Psychology 84-95 (2015).
The use of e-signatures is ubiquitous in the marketplace. The federal ESIGN Act (2000) and Uniform Electronic Transactions Act (UETA) essentially provide that an electronic signature is valid law if:
Minnesota UETA. Minnesota has adopted the Uniform Electronic Transactions Act, which is contained in Chapter 325L of the Minnesota Statutes. Minn. Stat. § 325L.06 states that UETA must be construed and applied to “facilitate electronic transactions.” Minn. Stat. § 325L.07(a) states that: “A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.” Minn. Stat. § 325L.13, entitled “Admissibility in Evidence,” states that: “In a proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.” Minn. Stat. § 325L.09(a) states that, “An electronic record of electronic signature is attributable to a person if it was the act of the person,” and that the act may be shown in “any manner.”
This Party Certificate. That said, some electronic signatures may be “better” than others. One issue relates to third-party certificates. A third-party certificate is an authentication of the electronic signature. Obtaining a certificate may help “prove” the authenticity of the signature.
Audit Trails. Another issue relates to the audit trail. The audit trail can show when the document was signed and what server was used to sign it. Unfortunately, some companies don’t use an audit trail, which undermine the ability to show the authenticity of the signature. In IO Moonwalkers, Inc. v. Bank of America Merchant Services, 814 S.E.2d. 583 (N.C. Ct. App. 2018), the merchant denied signing a document with an e-signature. The bank then produced an audit trail from DocuSign to show the date and time that sometime used the e-signature. The court ruled in favor of the bank because it had the audit trail. Had an audit trail not been produced, the court likely would have ruled the other way. See also Newton v. American Debt Services, Inc., 854 F.Supp.2d 712, 731 (N.D. Calif. 2012) (court found that consumer who disputed signing contract had actually signed it after debt settlement company testified that it sent the contract to the consumer using DocuSign and that it was signed in the client portion and received back from her, and an identifying code was assigned above her signature.)
Regulatory Compliance. Another issue relates to regulatory compliance. In In Re Mayfield, Case No. 16-22134-D-7 (Bankr. E.D. Cal. Jul. 15, 2016), the bankruptcy court imposed sanctions on a lawyer who allowed a client to use a DocuSign signature when the rules required a “wet” (original) signature. The court noted that electronic signatures can be forged or usurped, leading to unnecessary disputes over the validity of important documents.
Knowing Consent. Finally, there is the issue of intent. At least seven studies have found that electronic signatures evoke markedly different psychological reactions than “wet” or original signatures. The recipient of an electronic signature is more skeptical of the contractual commitment than one who receives a hand signature.[1] More important, people who apply an electronic signature generally are more prone to inaccuracies (i.e. to cheat) than when the same person applies a hand signature.[2] Indeed, psychologists believe that the highest form of integrity is when a contract is signed before a notary public. In contrast, the e-signed document has no physical signature at all.Psychologists believe that a person’s unique handwritten signature is a symbolic extension of the self, in contradiction to e-signatures, which are more transient. Psychology studies go so far as to say that the criteria of honesty and integrity vary as to whether the signatory is using a wet signature, a checkbox, a PIN, or simply typing one’s name (/s/ Mike Hatch)
E-signatures provide convenience in the modern marketplace. Having said that, if the transaction has high risk or high dollars, or if there are concerns about follow-through or integrity of the signatories, or if there are concerns about binding a particular individual within a company, then strong consideration should be given to old-fashioned original signatures. The fact that notaries still exist in this digitized era exemplifies residual concern for the authenticity of signatures in the marketplace.
Lori Swanson served as Attorney General from 2007 to 2019. Prior to that, she served as Solicitor General of the State of Minnesota and Deputy Attorney General. Mike Hatch served as Attorney General from 1999 to 2007. Prior to that, he served as Commissioner of the Minnesota Department of Commerce. Hatch and Swanson practice law at Swanson Hatch, P.A. They may be reached at 612-315-3037. Visit their website at www.swansonhatch.com.
www.swansonhatch.com
431 South Seventh Street, Suite 2545
Minneapolis, MN 55415
612-315-3037
The materials in this article are for informational purposes and do not constitute legal advice, nor does your unsolicited transmission of information to us create a lawyer-client relationship. Sending us an email will not make you a client of our firm. Until we have agreed to represent you, nothing you send us will be confidential or privileged. Readers should not act on information contained in this article without seeking professional counsel. The best way for you to inquire about possible representation is to contact an attorney of the firm. Actual results depend on the specific factual and legal circumstances of each client’s case. Past results do not guarantee future results in any matter.
[1]MChou, “Paperless and Soulless: E-signatures Diminish the Signor’s Presence and Decrease Acceptance,” 60 Journal of Experimental Social Psychology 26 - 50 (2014).
[2]Chou, “What’s in a Name? The Toll e-signatures Take on Individual Honesty,” 61 Journal of Experimental Social Psychology 84-95 (2015).
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Swanson | Hatch, P.A.
431 S. 7th Street, Suite #2545
Minneapolis, MN 55415
612-315-3037
www.swansonhatch.com