| A cornerstone of United States contract law is | | | | advise your clients regarding the potential pitfalls |
| the general application of the Statute of Frauds to | | | | accepting terms of an online transaction without |
| contractual agreements. Emerging forms of | | | | fully understanding what they are agreeing to. |
| electronic commerce and new types of | | | | Simply accepting these terms may interfere with |
| contractual relationships have begun challenge the | | | | your client's right to the judicial system for |
| very idea of defining the four corners of a | | | | dispute resolution, as click-on arbitration clauses |
| contract. Many obstacles concerning contractual | | | | are also generally enforceable. Your clients will not |
| relationships arise with the proliferation of | | | | be able to rely on the Statute of Frauds in order |
| electronic commerce, most notably determining | | | | to demonstrate that there was no intent to |
| what constitutes a valid signature. Traditionally, the | | | | contract. With electronic signatures, intent is an |
| Statute of Frauds is a collective term describing | | | | objective standard, generally determined by the |
| various statutory provisions that deny | | | | simple click of a mouse. |
| enforcement of certain forms of contracts unless | | | | II. Digital Signatures |
| they are reduced to writing and signed by the | | | | Unlike electronic signatures, digital signatures are |
| party to be charged. The problem with this | | | | more often than not used as a means of |
| traditional idea of the Statute of Frauds is how it | | | | demonstrating affirmative intent. The problems |
| relates to electronic commerce in determining | | | | with digital signatures do not stem from |
| whether the party being charged with the | | | | inadvertent agreement to terms, but rather from |
| contract has actually "signed" the contract for | | | | the security and confidentiality of the digital |
| purposes of enforcement. | | | | signatures. Generally speaking, digital signatures |
| Various forms of legislation dealing with internet | | | | are encrypted electronic signatures that a third |
| law have attempted to define and describe digital | | | | party (often referred to as the certification |
| and electronic signatures for purposes of | | | | authority) authenticates as genuine. Unlike the |
| determining enforceability. Generally, there are | | | | more general electronic signature, a digital |
| two broad categories of signatures when dealing | | | | signature must be unique and strictly under the |
| with electronic contracts. | | | | sole custody of the party using it. Unlike electronic |
| | | | signatures, where a typed name, a company |
| 1. | | | | name or even a logo can all bind the party to be |
| Electronic Signatures ("E-Signatures") | | | | charged by its mere presence, digital signatures |
| 2. | | | | offer the agreeing party greater levels of security |
| Digital Signatures | | | | and efficiency. The general types of signatures will |
| I. Electronic Signatures | | | | not be enforceable as a digital signature. Because |
| The Uniform Electronic Transactions Act (UETA) | | | | of the authentication requirements of a digital |
| defines electronic signature as "an electronic | | | | signature, it should be recommended that clients |
| sound, symbol, or process attached to or | | | | rely on the use of digital signatures for any |
| associated with, an electronic record and | | | | high-profile or high liability electronic contract. |
| executed or adopted by a person with the intent | | | | Digital signature use will only increase in use in the |
| to sign the record." UETA, §2. Often | | | | future, as parties to all transactions will seek a |
| referred to as 'click-wrap' agreements, these | | | | heightened level of information security without |
| forms of electronic signatures are given a broad | | | | the fear of accidentally agreeing to unfavorable |
| presumption of enforceability through acts such | | | | terms. While there is an inherent fear of paperless |
| as UETA and the Electronic Signatures in Global | | | | transactions, especially with more traditional |
| and National Commerce Act (ESGNCA/ "E-Sign"). | | | | attorneys and companies, the use of digital |
| These acts make it clear that binding contracts | | | | signatures makes commerce faster, more secure |
| may be created by the exchange of email or by | | | | and more effective and should be recommended |
| simply clicking "yes" on those click-on licensing | | | | to clients when appropriate. The use of digital |
| agreements that we have all accepted w ith all | | | | signatures is even more effective when dealing in |
| types of internet transactions. Like the UETA, the | | | | international trade, making it no longer necessary |
| ESGNCA does require that consumers | | | | to fly overseas in order to demonstrate intent to |
| affirmatively consent to the click agreements and | | | | sign a contract. |
| that the vendor must provide the consumer with | | | | While understanding and zealously advising clients |
| a clear and conspicuous statement regarding the | | | | to the use of various forms of signatures for |
| effect of agreeing to click, but parole evidence is | | | | electronic commerce is important, it is also |
| rarely allowed in order to prove or disprove intent | | | | imperative to understand that we are still in the |
| to contract. ESGNCA§101(c)1. By simply | | | | early years of a technological revolution, and that |
| clicking "I agree" intent is presumed. | | | | part of being an effective advocate is keeping up |
| The widespread enforceability of electronic | | | | to date on advancements in the law. Electronic |
| signatures is also recognized as completely valid | | | | and digital signatures are only the beginning. |
| for purposes of liability protection by the Digital | | | | Advancements in technology will soon allow for |
| Millennium Copyright Act. DMCA§512(3)(A)(i). | | | | the widespread use of biometric identification as a |
| As a relatively settled area of internet law, it is | | | | means of demonstrating intent to contract. |
| important to understand the enforceability of | | | | Principles of contract law will continue to evolve |
| electronic signatures, whether or not intent is | | | | with technology and while the application of |
| manifest from the face of the agreement itself. | | | | contract principles and the Statute of Frauds will |
| Since these click wrap agreements are | | | | not substantially change, their interpretation and |
| presumptively enforceable, it is important to | | | | use surely will. |