eSignatures and Complex Legal Transactions
The use of electronic signatures (or “eSignatures”) by attorneys in complex legal transactions—M&A deals and sophisticated commercial finance and lending transactions—is not particularly common today. We often hear attorneys ask, if other practitioners aren’t using electronic signatures on these types of transactions, are they enforceable?
In an article we wrote earlier this year, we discussed why fewer attorneys are using electronic signatures on complex transaction despite their prevalence in most other industries—we call it the Electronic Signature Paradox. Adoption, we found, has less to do with enforceability and more to do with standard practice and market demand. So let’s examine the major regulatory frameworks attorneys should consider when considering electronic signatures.
Enforceability in the United States
Electronic signatures in the United States are governed at the federal level by the Electronic Signatures and Global National Commerce Act ("E-SIGN"), 15 U.S.C. § 7001 (National) and at a state level by the Uniform Electronic Transactions Act ("UETA"). UETA has been adopted in all but three states and only Washington requires additional encryption standards to enforce electronic signatures.
UETA and E-SIGN both indicate that “a record or signature may not be denied legal effect or enforceability solely because it is in electronic form." Both statutes define an electronic signature as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” Thus, electronic signatures under E-SIGN and UETA are interpreted broadly and satisfy handwritten signature requirements.
The standards for enforceability of electronic signatures varies from country to country, but generally electronic signatures are enforceable if they are 1) uniquely linked to a signatory, 2) capable of identifying the signatory, 3) created using signature creation data that the signer can use under their sole control, and 4) linked to the signed data in such a way that any subsequent change in the data is detectable.
In 2014, the European Union passed the Electronic Identification and Signature Regulation 910/2014 (eIDAS). While eIDAS allows member states to create heightened requirements for different types of records, Article 25(1) of the eIDAS Regulation provides that an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form.
eSignatures with SimplyAgree
SimplyAgree makes electronic signatures accessible for complex legal workflows, so attorneys can easily integrate the benefits of electronic signing on their M&A, venture capital or commercial finance and lending transactions.
SimplyAgree adheres to the highest industry standards to provide a secure evidentiary record of every transaction asset. Our platform enables users to take advantage of detailed audit trails, public key encryption and multiple levels of authentication for compliance on every signature.