Thursday, September 13, 2012

Will An Electronic Signature Hold Up In Court?

Does one click make this contract legally binding?
Have you switched to online registration, but have the urge to chase people down to sign a paper copy because you're not sure if the electronic signature will hold up should you ever need it to?

Maybe you don't have to!

Disclaimer:  I am not a lawyer and "The Dance Buzz" is not a law firm and does not provide legal advice.  If legal advice is required, please seek the services of an attorney.

The signature is only as good as the contract.

First things first.  If your contract on paper wouldn't hold up in court, then an electronic version won't either.

Have your registration contract created or reviewed by a legal professional to make sure you are including the right language and terms.

Be sure to tell your legal professional what you want the contract to do:  Cover liability?  Create a tuition contract?  Be very specific in your contract and make it air-tight.  Once you have a good contract, then we can move online.

What exactly is the law?

Hand On MouseIf you operate in the United States, your electronic signatures will most likely be governed by the Uniform Electronics Transactions Act (UETA) and E-SIGN law.

The UETA has been adopted by 47 states and Puerto Rico, so unless you live in New York, Washington or Illinois, it will cover you.

How does UETA protect me and my dance studio? 

A large part of this act applies to electronic signatures, which how your customers "sign" your contract and policies when they register online.

Two of the most important parts of UETA are Section 7, which gives electronic signatures as much legal value as a paper signature would, and Section 12, which eliminates the need to retain a paper copy of a registration form.  This means that in court, e-signatures = paper signature and no more paper filing for us!

Anything else I should know?

Your must provide a way for your customer to print or save the contract or agreement from your website or else it will not be legally binding.

The UETA words it as making the information "available to all parties", which means there must be a way to print or save the contract at the time of signing online so that they can keep a copy of it if they wish (Section 8 or UETA).

pen and paper
No more chasing down parents to sign registration forms!

So bottom line, should I have parents sign a paper copy even though they signed up online?

Nope, an online signature is legally binding and a paper copy of the same contract would be redundant and unnecessary paperwork on your end.   

Save yourself some time and effort trying to get all those parents to sign the registration forms!

At our studio, I make available a paper copy of our online contract and policies.  I leave them out on the wall for people to take.  I would say only about 10-20% of our customers will actually grab one to take home or read.  

Ok, I live in New York, Illinois or Washington or somewhere else the UETA does not apply.  Am I covered?

These states all have statutes that govern electronic signatures.

New York: Views electronic signatures as legally-binding as paper signatures.

The details:  New York's e-signatures are governed by State Technology Law, Article 3 and most recently by the Electronic Signatures and Records Act (ESRA) that was passed in 2011. ESRA gives electronic signatures the same validity and legal-binding as paper signatures. There are some exceptions (wills, trusts, health care proxies, etc), but dance studio registration forms are NOT one of these exceptions.

Illinois: Electronic signatures are recognized, but watch your contract wording.

The details:  Illinois adopted an electronic signature law in 1998 (5 ILCS 175/), but case law since then suggests that you should add wording to your contract that states you intend to use the electronic signature in place of a paper signature.  It may sound redundant, but it will help it hold up in court. It is also advised to make sure your online registration process adds a timestamp to the signature to help it have more effect in Illinois court.


Washington:  Will not dismiss an electronic signature in court, simply because it's electronic.

The details: Washington enacted the electronic authentication act in 1997, favors "digital signatures" over "electronic signatures".  You can read more about that here.  Since electronic signatures are much more common, case law sugests that that as long as your contract is enforceable, it will be enforced whether it is electronically signed or signed on paper.

I am in Canada or another country, what's the deal?

You should ask a legal representative in your country about electronic signatures, but if you want to do some research first, check out Wikipedia's list of electronic signature law by country.

Resources & Opinions From Experts

Have you switched to online registration this year?  Do you still have people sign a paper copy?

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