24 May 2021
/ Alexander C. Weinberg
Using Electronic Signatures and Electronic Records Communication is Key
Technology is changing the way that we, as a society, interact with one another. Electronic communications, transactions, and dealings are becoming the new “norm.” With that in mind, it is important to make sure that if individuals and/or businesses choose to conduct dealings in this manner, all parties understand and follow the proper procedures and laws that are in place to regulate these types of transactions. It will help to shield one’s self from liability for non-compliance. Two key parts of communicating and doing business electronically are electronic records and electronic signatures.
The Uniform Electronic Transactions Act (UETA) defines an electronic signature as an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.1 A signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature.2
A “transaction” means an action or set of actions occurring between two or more persons relating to the conduct of business, commercial, or governmental affairs.3 The first safeguard to ensure that a party cannot dispute the use of electronic signatures or records used in a transaction is to confirm the parties agree to transact business in this manner. The UETA only applies to transactions between parties that have agreed to conduct transactions by electronic means.4 Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties conduct.5
An actual written agreement between the parties, signed prior to the start of conducting business electronically, is an extremely safe way to protect businesses from a claim that electronic signatures and records are unenforceable, invalid, or insufficient. However, it is important for all parties involved to know that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form6, that a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation7, that if a law requires a record to be in writing, an electronic record satisfies the law8, and that if a law requires a signature, an electronic signature satisfies the law.9
BP Metals, LLC v. Glass, 2018-Ohio-3527, is a good example of the effect of the UETA in a foreclosure case. This is a Third District, Ohio, Court of Appeals case, addressing electronic transactions. The defendant in that case converted a note into electronic form and retained the hard copy that contained his original signature. This assignment of error revolved around whether there was an issue of genuine fact as to whether the parties agreed to conduct the transaction by electronic means and create a binding contract with the meaning of Ohio Revised Code 1306 (“the UETA”). The trial court originally granted the defendant summary judgment, stating that there were no issues remaining.
The defendant asserted that he was entitled to judgment as a matter of law because the plaintiff did not have possession of the note depicting his “original” signature.10 The defendant sent a copy of the executed note via email and was believed to not have forwarded the original. The defendant signed his version that was in his possession.11
A document converted to digital form and remitted by email is an electronic record.12 The effect of an electronic record or signature attributed to a person…shall be determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties’ agreement, if any.13 In a proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.14
Based on the application of the UETA, the Court of Appeals reversed and remanded the trial court’s decision, stating that there is a genuine issue of material fact as to whether the parties agreed to conduct business electronically, creating a binding contract under the meanings defined in Ohio Revised Code 1306.15 This case is a great example to show that before businesses and individuals conduct business, agreeing upon, in writing, the appropriate and acceptable methods (i.e. are electronic records, signatures, and communications agreed upon) can help avoid future problems.
Wolfe v. J.C. Penny Corp,. 2018-Ohio-3881, a Tenth District, Ohio, Court of Appeals Case, emphasizes the use of electronic signatures, and their binding effect. The defendant applied her electronic signature, by checking a box, at the end of an arbitration agreement that was administered via a kiosk.16 The defendant submitted into evidence an affidavit stating she never knowingly electronically signed the agreement and that the agreement was never presented to her.17 The plaintiff, through their own affidavit, alleged that the defendant was presented the agreement via the employee kiosk, and willingly signed the agreement, after reading it, by clicking the box in said kiosk.18
In this case, the affidavits, which were executed correctly, authenticated the statements and facts presented by both the plaintiff and the defendant and were properly admitted into evidence.19 The Court of Appeals reviewed the evidence, and determined that the defendant was presented the agreement through the kiosk, and was bound to the agreement when she applied her electronic signature by clicking the box acknowledging so.20 While this is not a foreclosure case, it does highlight the enforceability of electronic signatures, even when that is simply “checking a box”.
Overall, electronic records and signatures should be embraced (especially during this COVID-19 pandemic, which limits personal interaction), as it is supposed to make our lives easier, in business or otherwise. Knowing and understanding the laws and procedures that govern this area can go a long way in saving time and money further down the road. If you choose to conduct business electronically, make sure you are in compliance with the UETA.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
1 Ohio Revised Code 1306.01(H)
The Uniform Electronic Transactions Act (UETA) defines an electronic signature as an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.1 A signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature.2
A “transaction” means an action or set of actions occurring between two or more persons relating to the conduct of business, commercial, or governmental affairs.3 The first safeguard to ensure that a party cannot dispute the use of electronic signatures or records used in a transaction is to confirm the parties agree to transact business in this manner. The UETA only applies to transactions between parties that have agreed to conduct transactions by electronic means.4 Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties conduct.5
An actual written agreement between the parties, signed prior to the start of conducting business electronically, is an extremely safe way to protect businesses from a claim that electronic signatures and records are unenforceable, invalid, or insufficient. However, it is important for all parties involved to know that a record or signature may not be denied legal effect or enforceability solely because it is in electronic form6, that a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation7, that if a law requires a record to be in writing, an electronic record satisfies the law8, and that if a law requires a signature, an electronic signature satisfies the law.9
BP Metals, LLC v. Glass, 2018-Ohio-3527, is a good example of the effect of the UETA in a foreclosure case. This is a Third District, Ohio, Court of Appeals case, addressing electronic transactions. The defendant in that case converted a note into electronic form and retained the hard copy that contained his original signature. This assignment of error revolved around whether there was an issue of genuine fact as to whether the parties agreed to conduct the transaction by electronic means and create a binding contract with the meaning of Ohio Revised Code 1306 (“the UETA”). The trial court originally granted the defendant summary judgment, stating that there were no issues remaining.
The defendant asserted that he was entitled to judgment as a matter of law because the plaintiff did not have possession of the note depicting his “original” signature.10 The defendant sent a copy of the executed note via email and was believed to not have forwarded the original. The defendant signed his version that was in his possession.11
A document converted to digital form and remitted by email is an electronic record.12 The effect of an electronic record or signature attributed to a person…shall be determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties’ agreement, if any.13 In a proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.14
Based on the application of the UETA, the Court of Appeals reversed and remanded the trial court’s decision, stating that there is a genuine issue of material fact as to whether the parties agreed to conduct business electronically, creating a binding contract under the meanings defined in Ohio Revised Code 1306.15 This case is a great example to show that before businesses and individuals conduct business, agreeing upon, in writing, the appropriate and acceptable methods (i.e. are electronic records, signatures, and communications agreed upon) can help avoid future problems.
Wolfe v. J.C. Penny Corp,. 2018-Ohio-3881, a Tenth District, Ohio, Court of Appeals Case, emphasizes the use of electronic signatures, and their binding effect. The defendant applied her electronic signature, by checking a box, at the end of an arbitration agreement that was administered via a kiosk.16 The defendant submitted into evidence an affidavit stating she never knowingly electronically signed the agreement and that the agreement was never presented to her.17 The plaintiff, through their own affidavit, alleged that the defendant was presented the agreement via the employee kiosk, and willingly signed the agreement, after reading it, by clicking the box in said kiosk.18
In this case, the affidavits, which were executed correctly, authenticated the statements and facts presented by both the plaintiff and the defendant and were properly admitted into evidence.19 The Court of Appeals reviewed the evidence, and determined that the defendant was presented the agreement through the kiosk, and was bound to the agreement when she applied her electronic signature by clicking the box acknowledging so.20 While this is not a foreclosure case, it does highlight the enforceability of electronic signatures, even when that is simply “checking a box”.
Overall, electronic records and signatures should be embraced (especially during this COVID-19 pandemic, which limits personal interaction), as it is supposed to make our lives easier, in business or otherwise. Knowing and understanding the laws and procedures that govern this area can go a long way in saving time and money further down the road. If you choose to conduct business electronically, make sure you are in compliance with the UETA.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
1 Ohio Revised Code 1306.01(H)
2 Ohio Revised Code 1306.01(H)
3 Ohio Revised Code 1306.01(P)
4 Ohio Revised Code 1306.04(B)
5 Ohio Revised Code 1306.04(B)
6 Ohio Revised Code 1306.06(A)
7 Ohio Revised Code 1306.06(B)
8 Ohio Revised Code 1306.06(C)
9 Ohio Revised Code 1306.06(D)
10 BP Metals, LLC v. Glass, 2018-Ohio-3527
11 Id.
12 Id. at P19
13 Id.
14 Id.
15 Id.
16 Wolfe v. J.C. Penny Corp., 2018-Ohio-3881
17 Id. at P15
18 Id. at P16
19 Id. at P14
20 Id. at P19
4 Ohio Revised Code 1306.04(B)
5 Ohio Revised Code 1306.04(B)
6 Ohio Revised Code 1306.06(A)
7 Ohio Revised Code 1306.06(B)
8 Ohio Revised Code 1306.06(C)
9 Ohio Revised Code 1306.06(D)
10 BP Metals, LLC v. Glass, 2018-Ohio-3527
11 Id.
12 Id. at P19
13 Id.
14 Id.
15 Id.
16 Wolfe v. J.C. Penny Corp., 2018-Ohio-3881
17 Id. at P15
18 Id. at P16
19 Id. at P14
20 Id. at P19
