How to Make Your E-signature Bulletproof: California Uniform Electronic Transactions Act’s Special Requirements

Humankind is in a rapid transition to an intangible cloud-based lifestyle, and society continues to be presented with issues caused by such change. Smartphone applications now allow individuals to create and disburse deep fake videos, celebrity audio voice overs, and fabricated images at the palm of their hands. The issues caused by such power not only affect social media feeds and generates fake news, but also bleeds into the legal community. Specifically, electronic signatures have been the cause of debate regarding their validity and enforceability due to potential authentication problems. Fortunately, if a signatory complies with the California Uniform Electronic Transactions Act (“UETA”), Cal. Civil Code §§ 1633.1 et seq., they can execute a binding electronic signature from the convenience of their physical or Metaverse home.

UETA became effective in California on January 1, 2000 and governs transactions that are business, commercial, or governmental in nature. (Civ. Code § 1633.2(o).) (Civ. Code § 1633.3(a).) UETA provides that an electronic signature may not be denied legal effect or enforceability solely because it is in electronic format. (Civ. Code § 1633.7(a).) There are four main requirements for a signatory to provide a valid electronic signature when executing a transaction. First, UETA defines an “electronic signature” as an electronic sounds, symbol, or process attaches to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record. (Cal. Civ. Code § 1633.2(h).) As with wet signatures, UETA requires that it be the intent of the signatory to execute an electronic signature so that it may bind them to the information on the document.

Second, prior to the use of electronic signature there must be an agreement between the parties to execute a transaction through the use of electronic means. (Civ. Code § 1633.5(b).) The agreement between the parties need not be explicit but can be inferred based on the context and surrounding circumstances of the transaction. (Id.) For example, in J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 989, the court stated that the parties agreed to negotiate the terms of an agreement by email, but the purported accepting party did not accept and execute an electronic transaction when they replied “I accept” via email. The court noted that the email containing the offer requested no signature, contained no signature block and advised that future paperwork was forthcoming. (Id.) If the offer email had contained such indications of a desire to execute an electronic transaction, and the accepting party responded with an electronic signature, then the agreement would have been enforceable notwithstanding the absence of an explicit agreement to execute an electronic transaction.

Third, an electronic record on which the electronic signature is affixed must be capable of being retained and accessible for later reference with the same information it contained at the time it was first generated in its final form. (Civ. Code § 1633.12(a).)

Lastly, the electronic signature is attributable to a person if it was the act of that person. (Civ. Code § 1633.9(a).) The party seeking enforcement must be able to prove that the e-signature was the act of the signatory in order to enforce it against him. It is not a great burden to attribute the e-signature to the signatory since attribution depends on the circumstances at the time of its creation. (Civ. Code § 1633.9(b).) For example, the enforcing party can identify who sent the contract to the signatory, how the contract was sent to the signatory, how the signed contract was received by the enforcing party, who received the signed contract, and any security processes like two-factor authentications or unique passwords necessary to access the document to be signed. (See Fabian v. Renovate American, Inc. (2019) 42 Cal.App.5th 1062, 1069.)

Compliance with the four enumerated requirements above should generally be sufficient to provide a valid electronic signature when executing most transactions. As mentioned above, UETA governs California transactions that are business related, commercial, or governmental in nature. On the other hand, the Electronic Signatures in Global and National Commerce Act (“E-SIGN”) is a federal act that governs electronic signatures used in foreign and interstate transactions. Although E-SIGN has the same general requirements as UETA, it does contain slight variations. Thus, UETA and E-SIGN should always be referred to in order to ensure full compliance with what might be a unique electronic transaction with special requirements.