Electronic Signatures and Electronic Transactions in Utah: Can They Always Replace a Paper and Pen?
Do Utah laws always allow you to use an electronic signature instead of physically signing a piece of paper? How about electronic transactions – will those suffice in lieu of physical documents and physical deliveries (such as mail or hand-delivery)? The answer, in summary, is: often, but not always.
The Utah Code contains a set of laws about the effectiveness of electronic transactions and electronic signatures, called the Uniform Electronic Transactions Act (“UETA”), which has also been adopted in most other states. Utah Code Ann. § 46-4-101 et seq. The UETA explains the types of circumstances that need to exist to legally permit electronic signatures within the context of “transactions” (i.e., actions between two or more people relating to business, commercial, or governmental affairs), and to permit electronic transactions.
Regarding both electronic signatures and electronic transactions, the UETA does not apply to: wills; codicils; testamentary trusts; and most commercial transactions, including negotiable instruments (such as checks), bank deposits and collections, funds transfers, letters of credit, documents of title, investment securities, and secured transactions. The UETA does however apply to the commercial transactions of sales and leases.
The UETA references a few situations in which electronic signatures and electronic transactions will not be valid or enforceable:
- Electronic signatures and electronic records are not sufficient when the signature or record was not the act of the person whose identity is linked to it;
- Electronic signatures/transactions are not sufficient when one or more of the people involved in the transaction has not agreed to conduct transactions by electronic means; and
- All state governmental agencies have the option to prohibit electronic transactions or signatures. So when you’re dealing with transactions related to governmental affairs, make sure you’re aware of the relevant governmental agency’s rules on electronic signatures.
Otherwise, if an electronic signature, transaction, or record (i) is covered by the rules of the UETA, (ii) was an act of the correct person, (iii) involves all parties having agreed to conduct their transactions electronically, and (iv) is not prohibited by a specific governmental agency’s rules, then the electronic signature, transaction, or record likely will be valid and enforceable. The UETA states: “If a law requires a record to be in writing, an electronic record satisfies the law;” and “If a law requires a signature, an electronic signature satisfies the law.” Interestingly, even notary publics can also electronically sign electronic documents, under certain circumstances and rules as described in Utah Code Ann. § 46-1-16(8). (See also UETA: § 46-4-205.)
One question you might have is: How can I prove that the production of an electronic signature or electronic record was an “act” of the correct person? The UETA describes that:
- A Court would determine the answer by looking at the context and surrounding circumstances at the time the signature or record was made;
- A Court would also consider whether there was an effective “security procedure” in place (i.e., an effective way of verifying that an electronic signature, record, or performance was that of a specific person); and
- The Court would see if there are any specific laws containing requirements about electronic signatures or transactions for the particular type of transaction at hand.
You might also wonder what it means to “agree” to conducting transactions by electronic means, and how a Court would determine whether all the parties indeed agreed. In a recent case on appeal, the Utah Appellate Court looked at this question and indicated that “the UETA does not require an express agreement,” and that an evaluation of the “context and surrounding circumstances” of an electronic transaction includes evaluating the parties’ “conduct”. VT Holdings LLC v. My Investing Place LLC, 2019 UT App 37, ¶20 (Utah Ct. App. 2019).
In this case, one of the parties delivered a record electronically – specifically, by fax. This party then argued that the transaction shouldn’t be considered valid or binding, because they hadn’t agreed to conduct business electronically. But the Appellate Court disagreed with the party’s argument, given that the party’s conduct included: (a) accepting the unsigned record via email, (b) signing the record in front of a notary public, and (c) when faxing over the signed record, failing to state that any conditions existed or otherwise informing the other party that the signed record was not intended to be effective. Id. at ¶21. The Court found that by virtue of this conduct, the parties “agreed to conduct this transaction electronically.” Id. at ¶22.
If you have any questions about whether an electronic signature or transaction in your particular situation is valid and sufficient, it is always best to speak with a competent Utah attorney.
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