This morning, for the second time in as many weeks, a client and its counterparty “signed” a contract by exchanging “Agreed” emails with the final draft of the contract as an attachment. Here’s how it worked.
For this purpose, we’ll call my client “ABC Corporation” whose CEO is “Ann”; the other side is “XYZ Inc.” whose CEO is “Xavier.” I’ve edited the email texts below for confidentiality reasons and to tweak the language slightly for future use.
FIRST, I sent an email to XYZ’s lawyer, “Xerxes,” with whom I’d worked in negotiating the final draft of the contract:
Xerxes, please see the attached redline (the only new changes are in section xxx) and the corresponding clean version.
From a “mechanics” perspective, I’d suggest that we do the following:
1. Please let me know the name, title, and email address for the person who will “sign” the contract on behalf of XYZ.
2. By separate email, I’ll send you the text of a “signature email” for your review [it’s below].
3. I’ll send the signature email to all concerned (including you, of course) with the clean version of the contract as an attachment.
4. ABC’s CEO Ann, as well as the signer for XYZ, will each do a Reply to All to the signature email, indicating that they agree to the contract on behalf of their respective parties.
5. The signature email thread and attachment will serve as “the contract” — as you probably know, email exchanges can form binding contracts under the federal E-SIGN Act and various state versions of the Uniform Electronic Transactions Act (see the citations in [link omitted; see below]).
If that works for XYZ, please let me know and I’ll send out the signature email as indicated above.
We appreciate your help in getting this done so smoothly.
THIRD: Xerxes sent me the name, title, and email address for the person who would sign on behalf of XYZ.
FOURTH: I sent all concerned the following “signature email”:
[Subject line:] CONTRACT SIGNATURE BY EMAIL: ABC Corp. & XYZ Inc. [title of contract]
ANN and XAVIER: Please do a Reply to All with the text “Agreed” to confirm that ABC Corporation and XYZ Inc. have agreed to the attached [contract title].
The attachment will serve as the binding contract, “signed” electronically by this email exchange.
XERXES [XYZ’s in-house lawyer]: As previously discussed by email, the attachment is a PDF of the final document that we discussed by email today, with no other changes.
[my signature block]
FIFTH: Each CEO sent a Reply to All email that said, simply, “Agreed.”
FINALLY: I tagged the email thread with a “Contract-signed” label, for easier finding later.
IS THIS LEGAL? U.S. law explicitly supports the use of electronic signatures, which are becoming increasingly popular in business:
- See generally the federal Electronic Signatures in Global and National Commerce Act (E-SIGN Act), 15 U.S.C. § 7001 et seq., which provides in part (subject to certain stated exceptions) that, for transactions “in or affecting interstate or foreign commerce,” electronic contracts and electronic signatures may not be denied legal effect solely because they are in electronic form.
- At the U.S. state level, 47 states, the District of Columbia, and Puerto Rico, and the U.S. Virgin Islands have adopted the Uniform Electronic Transactions Act (UETA).
- The remaining three states — Illinois, New York, and Washington — have adopted their own statutes validating electronic signatures.
U.S. courts now routinely honor electronic “signatures. See, e.g., Naldi v. Grundberg, 80 A.D.3d 1, 908 N.Y.S.2d 639 (N.Y. App. Div. 2010).
Electronic signatures are now common in England and Wales as well. See generally Law Commission, Electronic Execution of Documents (2019), at https://perma.cc/UCQ7-U94M.
Caution: Some jurisdictions might require handwritten signatures for some types of contract; for example, under California law, a car dealer apparently must still obtain a manual contract signature from a car buyer. See Cal. Civ. Code § 1633.3(c) (various carve-outs from authorization of electronic signatures) and Cal. Veh. Code § 11736(a) (requiring signed agreement with car-buying consumer).