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When Do Electronic Signatures Count?

In the Internet Age, purported electronic signatures are becoming more and more common. They are the standard in certain areas of business law, like when one electronically “signs” a contract to engage in e-commerce. Real estate law, however, has always been more paper driven. While other areas have traditionally allowed for alternative contract forms like oral contracts, matters of real estate have traditionally required a paper contract. Recently, a California court decided a rare case dealing with the validity of an electronic signature.

California Court Decides Validity of Purported Electronic Signature
In this recent decision, J.B.B Investment Partners, LTD v. R. Thomas Fair, the First District Court of Appeals interpreted a portion of California’s version of the Uniform Electronic Transactions Act (UETA). The purpose of this law is to establish that electronic signatures and records are the equivalent of paper records and manually signed signatures for commerce purposes. In the case, a trial court had determined that Fair’s printed name at the end of an e-mail where he had agreed to settlement terms in a prior email from J.B.B. counted as an electronic signature under the UETA and under contract law. The appellate court disagreed and held that Fair’s printed name in the email was not a sufficient electronic signature to make the settlement agreement binding.

Why Did Fair’s Purported Signature Not Count?
The appellate court held that Fair’s printed signature was not an “electronic signature” within the meaning of the UETA. The trial court had found there to be a preponderance of evidence that the parties had struck an agreement via email on July 5th. It reasoned that it was, “more likely than not Mr. Fair’s agreement that the matter had been settled according to what the e-mails and the voicemails said.” The trial court then relied on UETA’s to decided that the e-mails in this case, coupled with corroborating voicemails, can qualify as an electronic signature. The appellate court, however, determined that the trial court applied the wrong section of UETA.

UETA defines an electronic signature as “an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.” However, UETA only applies when both parties consent to conduct a transaction by electronic means. The appellate court acknowledged that under UETA a printed name can satisfy UETA and even the Code of Civil Procedure section 664.6. However, simply establishing that a printed name in an email was the act of the person alleged to have “electronically signed” is not enough to show the name is actually an electronic signature. One must also show that the alleged signer also intended for the printed name to formalize the electronic transaction. Because in this case there was not sufficient evidence that Fair printed his name in the email with the intent to formalize an electronic transaction, the appellate court reversed the trial court’s decision.

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