NFIB

In the Electronic Age, What Constitutes a Legal Signature?
04/ 15/ 2002

It's common today for small business owners to establish long-term relationships with clients without ever meeting face-to-face. Although the widespread use of fax machines and email has made working at a distance uncomplicated and effective, it's still necessary to transfer signatures for contracts and other documents. In today's Workshop, contributor Jeffrey Moses discusses traditional methods of signature transfer, as well as recent legislation that adds a new dimension to conducting business in the electronic age.

For centuries, a legally binding signature has been accepted as the standard for formalizing contracts and agreements. When sent through the mail or by overnight courier, a signed (and sometimes notarized) document is legally binding, even when the parties are a continent or an ocean apart at the time of signing.

Signatures on documents sent by fax also have come to be accepted as legally binding, even though a fax contains no actual imprint upon the paper.

Small-business owners finalizing important contracts by fax should consider requesting that all signatures be notarized. This strengthens each party's position should questions arise about the authenticity of a signature.

But what about emails, in which signatures are often attached with the click of a mouse? Or e-commerce, where purchases are authorized with the click of an acceptance button?

In 2000, Congress passed the Electronic Signatures in Global and National Commerce Act (sometimes called the e-Signature Bill), which says that email signatures are binding in certain circumstances. It also makes electronic notarization of signatures legally binding and allows businesses to send copies of signed documents via email and fax. This greatly facilitates e-commerce activities, because it enables customers to finalize and make legal a purchasing agreement by clicking a button or typing a name on an electronic form.

To prevent consumers from entering unknowingly into a legally binding contract, the bill states that businesses must inform customers of their rights regarding electronic signatures and that customers must agree to such usage.

Finally, it is always best to consult with an attorney when entering a legally binding contract, no matter what method is used to sign the agreement.

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