ESIGN 101

Ken MoyleChief Legal Officer

DocuSign, Inc.

Margo TankPartner

BuckleySandler LLP

David WhitakerCounsel

BuckleySandler LLP

The UETA

• The state law solution – the Uniform Electronic Transactions Act– Created by NCCUSL– Overlay statute– Authorizes replacing writings with electronic

records– Authorizes electronic signatures– Requires affirmative “opt-in” by parties -- but opt-

in may be shown by surrounding circumstances

• Problems with the UETA

– Must be adopted by each state– Process can take years– States add non-uniform provisions– California– Doesn’t change federal law

The UETA

The Federal ESIGN Act

• A federal solution -- the Electronic Signature In Global and National Commerce Act– Covers state and federal law– Instant 50 state baseline uniformity– Adopts the most significant UETA provisions – Provides specific standards for consumer consent– Sets boundaries for regulatory authority

• Applies to the use of electronic records and signatures in virtually any business-to-business or consumer transaction, unless specifically excluded

– UETA applies to state law

– ESIGN applies to state and federal law

• Primary exclusions:

– Wills, codicils and testamentary trusts

– Funds transfers (covered by UCC Article 4A)

– Letter of Credit (covered by UCC Revised Article 5)

– Securities (covered by UCC Revised Article 8)

– Security interests in goods and intangibles (covered by UCC Revised Article 9)

– Software licensing laws (if State has adopted UCITA)

– Most laws concerning checks

Scope of the UETA and ESIGN

Scope of the UETA and ESIGN

• Included are:– Consumer protection laws– Laws governing real estate transactions (subject to special

rules concerning documents to be filed of record)– Laws governing Insurance– Laws of agency– Laws covering powers of attorney– Laws requiring notarization of documents– Laws governing trusts (except testamentary trusts)– Laws concerning the submission of documents to, or

issuance of documents by, government authorities (subject to special rules )

Three Pillars of the UETA and ESIGN

• A record or signature may not be denied legal effect or enforceability solely because it is in electronic form

• If a law requires a record to be in writing, an electronic record satisfies the law

• If a law requires a signature, an electronic signature satisfies the law

Electronic Records Under UETA and ESIGN

• “Record” means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form – All writings are records, but not all records are

writings– “Electronic Record” is virtually any stored record

that is not on paper

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”

Electronic Signature

• Includes:– traditional ink signatures– typed names– a click-through on a software program’s dialog box

combined with some other identification procedure – biometric measurements – a digitized picture of a handwritten signature– a complex, encrypted authentication system

Electronic Signature

• Legal sufficiency vs. attribution– UETA answers the question “is it a signature?”– Does NOT answer the question “is it your signature?”

• Attribution must be proven– May be proven by any means, including surrounding

circumstances or efficacy of agreed-upon security procedure

– Burden of proof is on person seeking to enforce signature

– Non-repudiation is a legal condition, not a technology feature

Electronic Signature

• Intent and authentication– Signer must intend to “authenticate” a document at

time of signing– Four basic purposes for authentication

• I agree to it• It came from me• I’ve seen it• I got it

– Purpose of signature derived from surrounding circumstances, just as on paper

– Need “indicia of intent,” just as on paper

The Federal ESIGN Act:Consumer Consent – A Closer Look

• Special procedure required if statute, regulation or other rule of law calls for a writing to be provided to a consumer

• Basic rules:– Consumer must affirmatively consent– Other party must provide disclosures prior to

consent in clear and conspicuous statement– Consent must demonstrate ability to receive

documents

The Federal ESIGN Act:Consumer Consent – A Closer Look

• Clear and conspicuous disclosure of:– Consumer’s right to have documents provided on paper– Consequences of withdrawal of consent

• Fees• Termination of transaction

– Scope of transaction covered by consent– Procedure for withdrawing consent and updating

contact info– Procedure and fees for obtaining paper copies– Hardware and software requirements for accessing and

retaining records

• “Reasonable demonstration”

– Consumer consent must • Be electronic or be confirmed electronically

• Include a “reasonable demonstration” of consumer’s ability to access information in the electronic form(s) provided

– Legislative history attempts to set standard• Test is not intended to “burden commerce”

• Email confirming receipt of test files is sufficient

– Failure to include “reasonable demonstration” in consent process may not be used as basis to invalidate contract

– Query: How to handle transactions where consumer gets paper but business retains electronic records?

The Federal ESIGN Act:Consumer Consent – A Closer Look

Key Requirements

• Key Requirements– Consent is required if law otherwise requires info delivered in writing

ESIGN Consumer Consent Process B-to-B Consent

– UETA delivery provisions not preempted by ESIGN Need Agreement (express or implied) on Delivery Method Need to deal with bouncebacks in many cases

– Popular Delivery Options Display as part of an interactive session, Delivery in the body of an email or as an email attachment, or Delivery of an email or other electronic notice that has a URL

embedded in it that the consumer may activate to review the information.

Key Requirements

• More Key Requirements• Electronic records are not enforceable against a recipient if the

sender inhibits the recipient’s ability to print or retain a copy• Recipient must be able to retain a copy for later reference• Electronic Records retained by sender must be accurate, remain

accessible for later reference• U.S. Mail delivery requirements in law or contract “trump” ESIGN,

and may prevent use of electronic records• All formatting, timing and display requirements must be observed.

“Timing” includes:• Proper sequence within transaction• Any time frames or deadlines for delivery• Length of time the information/document remains accessible