Know the Law: Creating Enforceable Contracts Electronically

John Bentas
Counsel, Corporate Department
Published: Union Leader
October 25, 2020
Insights - Featured Image - Corporate

Q: In this world of the “new normal,” are there ways to enter into binding contracts by purely electronic means?

A:  With most people working remotely, and businesses continuing to operate, including entering into agreements, can a legally binding agreement be created if you are not able to print and sign an agreement in order to avoid the “dreaded” oral contract (where it can become “he said, she said”)?  The answer is yes because of the Uniform Electronic Transactions Act.

The Uniform Electronic Transactions Act, adopted in New Hampshire, removes barriers to e-commerce and provides a legal framework for the use of electronic signatures and records in business transactions. Under the UETA, electronic records and signatures have the same legal effect as paper contracts and handwritten signatures.

Under the UETA, a transaction or signature may not be denied legal effect or enforceability solely because it is in electronic form. If a law requires a signature, an electronic signature satisfies the law. There are some limitations to this, including laws governing the creation and execution of wills, codicils, or testamentary trusts and certain contracts governed by the Uniform Commercial Code.

The keys to the application of the UETA are that: (1) the parties have explicitly agreed to conduct the transaction(s) electronically, and (2) the electronic record or signature is attributable to a person so long it was the act of the person. The parties can explicitly agree to conduct a transaction electronically by clearly manifesting that intent. Therefore, it should be made clear in the communications between the parties that the use of e-mail or other electronic means (such as Word documents) will be the methods of doing business between them.

The second component of the UETA requires that you have to “sign” by a means that is attributable to you as your act.  Under the UETA, an electronic signature can be sounds, symbol or process, so long as the signature is attached to or logically associated with the contract or record and executed or adopted with the intent to sign the record. Whether any given electronic signature is valid depends on the facts and circumstances of the specific situation.  Therefore, if you open the Word document and type your name in the signature line and send it back, or even reply via e-mail with a clear indication of assent, then you likely have a binding contract at that point.

In conclusion, you can enter legally binding contracts without physically signing them if you follow the UETA.