Electronic Signatures are Generally Enforceable

Now more than ever, the transaction of business is dependent on the use of electronic means to secure a person’s signature. Everything from change of beneficiary designations to purchase agreements can now be signed electronically. While there are a few exceptions to this general rule – notably, estate planning documents still require a traditional written signature – people have become accustomed to electronic signatures.

Both the federal government and the state of Michigan have had laws favoring electronic signatures for quite some time now. Michigan enacted its Uniform Electronic Transactions Act in October of 2000. While Michigan does require all parties to an agreement to consent to the enforceability of electronic signatures, its applicability is very broad. For example, an electronic signature can be a “sound, symbol or process” which is “executed or adopted by a person with the intent to sign the record.” This broad language opens the door to the enforceability of agreements made by email, text, facsimile and even voicemail. The use of these mediums to contract with others is unquestionably convenient but can also be dangerous. A person may discover that a few exchanged voicemails may have contractually obligated them to an agreement they didn’t necessarily expect.

Electronic signatures can also be obtained with a more formal approach. A cottage industry of electronic signature software has popped up in response to many states adopting laws similar to Michigan’s Act. Companies like DocuSign, Adobe and zipLogix have made obtaining electronic signatures easier than ever. Many realtors and financial industry professionals, for example, now rely every day on the use of electronic signatures to execute transactions.

This trend does not appear to be going anywhere. The Michigan Court of Appeals has looked at the use of electronic signatures and found that there are many ways to determine that a person intended to be bound by an electronic signature. They have also determined that a person’s technological literacy may impact the enforceability of an electronic signature. In a country where most people own and use a smart phone, the courts will likely continue to favor the use of electronic signatures.

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