The COVID-19 pandemic has required more and more individuals and businesses work remotely. This obviously changes the daily office routines and leaves clients, customers, partners and employees uncertain as to how they will perform and complete certain objectives, such as signing contracts. Businesses should be aware that federal and state laws allow for certain contracts to be executed and notarize electronically.
On June 30, 2000, Electronic Signatures in Global and National Commerce Act (“E-SIGN”) was signed into law, giving electronic signatures the same legal effect as handwritten signatures under federal law. The E-SIGN Act defines an electronic signature as “an electronic sound, symbol, or process attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” When federal law does not apply, many individual states have the option to adopt the Uniform Electronic Transactions Act (“UETA”). Currently, UETA has been adopted by forty-seven (47) states and the District of Columbia, with Washington (pending adoption of UETA), Illinois (the Electronic Commerce Security Act) and New York (the Electronic Signatures and Records Act) having passed similar legislation governing electronic transactions.
Businesses that intend for their contracts to be signed electronically (because either they do not want to meet in person or cannot have agreements readily signed and sent) should include specific language in their contracts to that effect.
Please note that certain types of agreements, such as contracts involving trusts and estates, and securities law, may still require handwritten signatures. Businesses must also be careful to adhere to applicable federal and state laws to ensure that all documents are enforceable after they have been signed. There are many new software platforms available that can offer digital identification, auditing, record retention and phone authentication.
On March 19, 2020, Congress introduced the Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020 (“SECURE”). To date, twenty-three states have approved the use of Remote Online Notarizations (“RON”). SECURE would allow the nationwide use of RON so that consumers and notaries can use two-way audio-visual communication to execute documents that require notarization.
While we eagerly await our lives and offices regaining a sense of normalcy, federal and state electronic signature and notarization laws exist and/or have been introduced that will help ease the burden of working remotely.
As when implementing these electronic signature measures, it is important for businesses to seek the advice of professional attorneys to ensure proper understanding and compliance with applicable state and federal law.
The information provided herein is informational and is not a substitute for engaging and obtaining legal advice from an attorney.