Electronic Contracts and the Law

Traditionally, legal contracts have always been in writing and memorialized by a signature on a hard document – a true paper contract.  With the internet use continuing to revolutionize the way we live, electronic contract law has adapted to support the enforceability of electronic contract formation.

Legality of Electronic Contracts

The courts of the United States have rules over and over again that electronic contracts are sufficient to satisfy the legal writing requirement that certain contracts must have in order be enforceable (contracts that fall under the Statute of Frauds), and electronic signatures are also sufficient to qualify as a legal signature.

Common Legal Issues

The most pervasive issue around electronic contract law and the electronic contract in general is what actually qualifies as a signature.  The issue can be complicated because there is no clearly defined answer, but the general rule is that digital signatures satisfy the electronic contract law requirements when they show intent to be bound and have a security attribute to prove that the signer was the proper person.  The actual signature itself is less important than the intent of the signer and the circumstances (including security) around the authenticity of the signing itself (i.e. is the person really who he claims to be). 

Federal E-SIGN Legislation

The Federal E-SIGN Legislation is the controlling piece of legislation that urges all states to adopt the Uniform Electronic Transactions Act (UETA) and to be welcoming to electronic commerce through electronic contract formation.  The theme behind the electronic contract law push is that technology is quickly evolving and in order for states and economy to keep up, contracts electronically created and signed must be valid and enforceable under electronic contract law.

Getting Legal Help

Electronic contracts are quickly becoming one of the most popular types of contract formation in the US; however, it is often difficult to navigate the laws that govern electronic contracts.  For this reason, individuals and businesses are urged to contact a local attorney who has experience with electronic commerce and who can explain the law and advice parties on their rights and liabilities. In any contract formation scenario, it is critical that both sides understand their rights and responsibilities under the contract that has been signed, whether in person or electronically.

Parties will be in the best position to avoid problems in the future if the contracting process is well planned and understood from the outset.  An attorney can be instrumental in ensuring a healthy contract relationship both at the start and as time goes on.