navigating electronic signature law in florida

Navigating E-Signature Laws

Presented By: Andrei D. Tsygankov, Esq.

Christopher M. Pozzi

Andrei D. Tsygankov• General Counsel for ClientSideTM

• Partner at Founders Legal® (Bekiares Eliezer LLP)• Corporate & IP Licensing Attorney• Education:

• B.S. in Management from Georgia Tech• J.D. from Georgia State University College of Law

What Are E-Signatures?

Earliest Instances of ‘E-Signatures’

The first widely used system for sending signatures across large distances was finalized in 1862.The “Pantelegraph” sent signatures or small drawings over existing telegraph lines. It’s first transmission carried a signature over 80 miles in less than two minutes!

E-Signatures vs. Digital Signatures

Relevant Laws• Uniform Electronic Transactions Act (UETA)

• Model law drafted by the National Conference of Commissioners on Uniform State Laws• Presented for adoption by individual states in 1999• http://www.uniformlaws.org/Act.aspx?title=Electronic%20Transactions% 20Act

• Electronic Signatures in Global and National Commerce Act (ESIGN)• 15 U.S.C. §§ 7001-7031 (“ESIGN”)• Passed into Federal Law in 2000 • http://www.gpo.gov/fdsys/pkg/PLAW-106publ229/html/PLAW-106publ229. htm

Relevant Laws

• Florida’s Adoption of Uniform Electronic Transactions Act (UETA) • Florida Statutes §668.50

• Became effective July, 2000• Electronic Signature Act of 1996 (ESA), Florida Statutes §§ 668.001–006

• http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0668/0668.html

E-Signature Definition

Electronic Signature:• “an electronic sound, symbol or process,

attached to or logically associated with a record, and executed or adopted by a person with the intent to sign the record”• 15 U.S.C. § 7006(5) (ESIGN)• Florida Statutes § 668.03(4)

Contract terms by ‘Click-Wrap’ agreement are valid

• Metro. Reg'l Info. Sys., Inc. v. Am. Home Realty Network, Inc., 722 F.3d 591, 600-03 (4th Cir. 2013) (finding that, by clicking “yes” in response to electronic terms of use agreement prior to uploading copyrighted photographs, a subscriber signed a written assignment of exclusive copyright ownership in those photographs).

• Bergenstock v. LegalZoom.com, Inc. 2015 WL 3866703 (finding that, clicking “Agree and Place Order” is valid acceptance of terms and conditions, including arbitration provision).

E-Signatures in Practice

Electronic Terms of Service are enforceable if presented to a user-signer together with a

required ‘Sign Up’ button • Fteja v. Facebook, Inc., 841 F.Supp.2d 829 (SDNY 2012)

(finding that consumers must be informed of terms of the transaction before signing electronically).

E-Signatures in Practice

ESIGN Act

• States must allow the use of electronic signatures if the parties involved agree to this method of signing.

• Applies to TRANSACTIONS: • In Interstate Commerce • In Foreign Commerce• With the Federal Government

ESIGN Act General Principles

• 1. A signature, contract, or other record related to any transaction cannot be denied legal effect, validity or enforceability solely because it is in electronic form.

• 2. Transaction is defined BROADLY:• Sale, lease, exchange, licensing or other disposition of personal

property, goods, intangibles, services or combination thereof;• Sale, lease, exchange or other disposition of any interest in real

property. 15 U.S.C. § 7006 (13).

ESIGN Act General Principles

• 3. A contract relating to any transaction (in or affecting Interstate Commerce or Foreign Commerce) may NOT be denied legal effect, validity, or enforceability solely because: • An electronic signature or electronic record was used in its

formation. 15 U.S.C. § 7001(a)(2).

ESIGN Act General Principles

• 4. If the law requires that a contract or other record must be in writing to have legal effect, validity or enforceability, electronic form may be denied if:

• Such record CANNOT be retained and accurately reproduced by all parties. 15 U.S.C. § 7001(e).

ESIGN Act General Principles

• 5. ESIGN does NOT require any person to use or accept electronic records or signatures.

15 U.S.C. § 7001(b)(2).• If parties agree to electronic signatures, then ESIGN gives them legal

effect.• In Business-to-Business (B2B) transactions, prior behavior among the

parties can govern acceptance of electronic signatures and records.• In Business-to-Consumer (B2C) transactions, Consumers must have

notice, and must consent.

ESIGN Does NOT Affect

• Substantive protections provided by consumer protection laws. 15 U.S.C. § 7001(b)(1).

• Content or timing of disclosures required by law. 15 U.S.C. § 7001(c)(2)(a).

• Any requirement by a federal regulatory agency, self-regulatory organization, or state regulatory agency that records be filed in a specified standard. 15 U.S.C. § 7004(a).

ESIGN Does NOT Apply To

• (a) Any contract or record if it is governed by:

• (1) A statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts. 15 U.S.C. § 7003(a)(1).

• (2) A State statute, regulation, or other rule of law governing adoption, divorce, or other matters of family law. 15 U.S.C. § 7003(a)(2).

• (3) the Uniform Commercial Code (UCC), as in effect in any State, other than sections 1–107 and 1–206 and Articles 2 and 2A. 15 U.S.C. § 7003(a)(3).

ESIGN Does NOT Apply To (Cont’d)

• (b)(1) court orders or notices, or official court documents (including briefs, pleadings, and other writings) required to be executed in connection with court proceedings. 15 U.S.C. § 7003(b)(1).

ESIGN Does NOT Apply To (Cont’d)

• (b) (2) any notice of—

• (A) the cancellation or termination of utility services (including water, heat, and power). 15 U.S.C. § 7003(b)(2)(a).

• (B) default, acceleration, repossession, foreclosure, or eviction, or the right to cure, under a credit agreement secured by, or a rental agreement for, a primary residence of an individual. 15 U.S.C. § 7003(b)(2)(b).

ESIGN Does NOT Apply To (Cont’d)

• (b) (2) any notice of—

• (C) the cancellation or termination of health insurance or benefits or life insurance benefits (excluding annuities). 15 U.S.C. § 7003(b)(2)(a).

• (D) recall of a product, or material failure of a product, that risks endangering health or safety. 15 U.S.C. § 7003(b)(2)(d).

ESIGN Does NOT Apply To (Cont’d)

• (3) any document required to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials. 15 U.S.C. § 7003(b)(3).

UETA

• Model law presented to states to codify into state law • Establishes that electronic signatures have the same legal

authority as ‘wet’ signatures• Adopted by 47 states, D.C., Puerto Rico, U.S. Virgin Islands.

Exceptions:• Illinois• New York• Washington

UETA & Reverse Pre-Emption

• States given option to enact UETA substantially as written, or face pre-emption by ESIGN Act

• If state adopted UETA in substantially Model form, the state’s law would prevail over ESIGN

• If a state’s UETA provision is inconsistent with ESIGN, the Federal law would again pre-empt as to that provision.

• Florida Statutes §668.50

• Effective for transactions involving electronic signatures & records on or after July 1, 2000

Florida UETA

• Florida Statutes § 668.50(7) • (a) A record or signature shall not be denied legal effect or

enforceability solely because it is in electronic form.• (b) A contract shall not be denied legal effect or enforceability

solely because an electronic record was used in the formation of the contract.

• (c) If a provision of the law requires a record be in writing, an electronic record shall satisfy the law.

• (d) If a provision of the law requires a signature, an electronic signature shall satisfy the law.

Florida UETA

Florida UETA

• Florida Statutes § 668.50(12) • (a) If a law requires that a record be retained, the requirement

is satisfied by retaining an electronic record of the information in the record which:• (1) Accurately reflects the information set forth in the record

after the record was first generated in final form as an electronic record or otherwise.

• (2) Remains accessible for later reference.

Florida UETA

• Florida Statutes § 668.50(12) – Cont.

• (c) A person may satisfy paragraph (a) by using the services of another person if the requirements of paragraph (a) are satisfied.

• Florida Statutes § 668.50(13)

• (d) In a proceeding, evidence of a record or signature may not be excluded solely because the record or signature is in electronic form.

Florida UETA

UETA vs. ESIGN: Family Law

Florida’s UETA • Does NOT expressly limit

applicability to family law.

ESIGN Act

• [Not applicable to any] State statute, regulation, or other rule of law governing adoption, divorce, or other matters of family law…

UETA vs. ESIGN: Admissibility in Court

Florida’s UETA

UETA specifically states that an electronic record and signature is not to be excluded solely on the basis of electronic format.

ESIGN Act

ESIGN Act does not provide specific rules and guidance on

when e-signature and e-records are considered admissible.

UETA vs. ESIGN: Consumer Protections

Florida’s UETA• Very lenient• Enforceability against consumers

determined by actions of the parties, the context and overall circumstances.

• Context, actions and circumstances taken into account when determining if a consumer provided consent.

ESIGN Act

• Consumers must affirmatively consent to electronic records.

• Consumers must be provided notice of their:• Rights to hardcopy records• Rights to withdraw consent and be

provided information on how to do so

• Need to review and store the e-records

UETA vs. ESIGN: Signature Authentication

Florida’s UETA

• Authentication of a signer’s signature or mark is critical.

• There must be proof that a signature is the mark (or the act) of a person who is supposed to sign.

• Extrinsic evidence may be used in proving this (for example: an IP address; exclusive access or use of an email account, etc.)

ESIGN Act

ESIGN Act does not address how or when signatures need to be

authenticated or attributed to a specific signer.

UETA vs. ESIGN: Variation by Parties

Florida’s UETA Parties may privately agree to vary the effects of UETA provisions.

ESIGN Act

No specific language in place that allows parties to privately change provisions of ESIGN.

UETA vs. ESIGN: Transmission & Receipt

Florida’s UETA

• UETA is lenient on the transmission and receipt of records. Generally,• A record is sent once it leaves control

of the sender.• A record is received when it enters

the system a recipient uses and becomes accessible to the recipient.

ESIGN Act

ESIGN Act does not address how or when a record is considered to

have been sent or when it has been received.

Electronic signatures satisfy state law writing requirement• Barwick v. Gov’t Employee Ins. Co., Inc., No. 10-1076, 2011 Ark.

LEXIS 111 (Ark.S. Ct. 2011). (Affirmation of lower court finding that electronic signature meets the requirement that a rejection of no-fault coverage be “in writing” under state law).

ESIGN & UETA in Practice

Written agreement in downloadable, electronic form is valid.

“…agreement is a “written provision” despite being provided to users in a downloadable electronic form. The latter point has been settled by the Electronic Signatures in Global and National Commerce Act (“E–Sign Act”)…”

• Specht v. Netscape Communications Corp. 306 F.3d 17 (2nd Cir. 2002)

ESIGN & UETA in Practice

• Common Hurdles: • NOT validity of electronic signatures themselves, but Issues

of substantive law. For example:

• Did the parties have INTENT to form a contract?• Did all parties have NOTICE (actual or constructive) of

the transaction terms?• Did all parties give proper CONSENT to the terms?

ESIGN & UETA in Practice

Receipt of announcement email insufficient to change terms of an agreement

• Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 559 (1st Cir. 2005) (finding that e-mail announcement regarding new dispute resolution policy was insufficient to put employee on notice that the policy was a contract that extinguished the right to access a judicial forum for resolution of federal employment discrimination claims ).

ESIGN & UETA in Practice

Signers must have NOTICE of terms BEFORE accepting electronically

• Labajo v. Best Buy, 478 F.Supp.2d 523 (SDNY 2007) (finding that consumers must be informed of terms of the transaction before signing electronically).

ESIGN & UETA in Practice

Third Party Agent’s electronic signature is validIF authority is given by principal

• Long v Time Insurance Company, 572 F.Supp. 2d 907 (OH 2008) (finding that electronic signature of insurance agent is valid if done on behalf of insured, if the insured had the opportunity to review the application and authorize the signature).

ESIGN & UETA in Practice

Record integrity & tamper-proof storage is crucial

• Adams v. Quicksilver, 210 Cal App. Unpub. LEXIS 1236 (2010) (finding that a party cannot prove, by preponderance of the evidence, that post-signature alteration of a document did not occur in a system that allowed post-signature alteration of the document).

ESIGN & UETA in Practice

Admissibility in court

• “To meet FRE 901(a) requirements for authentication, the audit trail, signatures and documents must also be secured in a manner that renders the information unalterable without detection”

• Lorraine v. Markel American Ins. Co., 241 F.R.D. 534 (D.Md 2007)

ESIGN & UETA in Practice

Admissibility in court

• “Organizations must demonstrate to the Court’s satisfaction that they have maintained a secure retrieval process of the audit trail and signed records by which a credible witness can confidently testify.”

• Lorraine v. Markel American Ins. Co., 241 F.R.D. 534 (D.Md 2007)

ESIGN & UETA in Practice

Authentication may be problematic if use of account or medium through which signatures

take place is not exclusive to signer• Kerr v. Dillard Store Services, Inc., 2009 BL 30588 (D.Kan

2009) (finding that mandatory arbitration provision in electronic agreement is unenforceable against employee because supervisor had access to employee’s account and opportunity to sign employee’s name).

ESIGN & UETA in Practice

Enforcing party has burden to show that the agreement was actually signed by party

against whom it is being enforced• Ruiz v. Moss Bros. Auto Group, Inc. 232 Cal.App.4th 836

(2014) (finding, on de novo review, that defendant did not prove by a preponderance of the evidence that plaintiff signed an arbitration agreement that defendant was seeking to enforce).

ESIGN & UETA in Practice

Takeaways

• For E-Signatures to be valid and enforceable: • All parties must consent to working together electronically • Terms being accepted must be clearly presented before

requiring signature• All parties must express their consent to the terms being

presented• All parties must have an exclusive way to sign or accept terms• All parties must have access to the signed contract, records or

data after signing

Best Practices

• Best Practices for Using E-Signatures: • Implement a way to authenticate the signing parties• Provide a secure method for each signer to access and sign

documents• Have a record or audit trail of the signing process• Utilize a system that will prevent document tampering• Use a secure storage and retrieval method that can be

proven

Applied Knowledge

• A Few of Many Advantages

• Legal Integrity• Administrative Efficiencies• Professionalism

Legal Integrity with E-Signature Technology

Legal Integrity with E-Signature Technology

• Do you ensure the document you sent was not modified?

• Single Document Accessed at a Central Server• Signed Document Locking with Tamper Evident

Markers• Secure Storage and Retrieval of Signed Document

Legal Integrity with E-Signature Technology

• Do you verify a signer’s identity?

• Multiple signers, sequential signing• ID Verification and Access Logs• Audit Trail for Every Signed Document

Admin Efficiency with E-Signature Technology

• Advantages:

• Automated Docketing• Faster Turn Around• Less Errors• Time Savings (and Increased Billing)

Legal Documents• Fee Agreements• Engagement Letters• Settlement Agreements• IP Assignment Agreements

General Contracts• Partnership Agreements• Joint-Venture Agreements• Services Agreements• Contracts for Sale of

Goods

Admin Efficiency with E-Signature Technology

HR Documents• Employment Agreements• Contractor Agreements• Non-Disclosure Agreements• Confidentiality Agreements• IP Assignment Agreements• Government Forms: W4/W9, I9,

G4

Entity Formation Documents• Operating Agreements• Shareholder Agreements• By-Laws• Minutes• Equity Grant Agreements

Admin Efficiency with E-Signature Technology

Professionalism with E-Signature Technology

• Clients are Making the Switch

• Corporate Clients• University Clients• Startups and Growth Companies• Stay ahead of your clients and exceed their

expectations!

E-Signature Technology: The Options

• DocuSign

• HelloSign

• EchoSign

• RightSignature

• ClientSide

Contact Us

Andrei Tsygankov, Esq. Andrei@goclientside.com

Chris Pozzi CPozzi@goclientside.com