Last month we discussed the power and pitfalls of electronic signatures and electronic transactions in Wisconsin. In this blog, we discuss electronic signatures and electronic records in Illinois, including how they meet writing requirements under Illinois law, and how they are to be retained.
Validity of Electronic Records and Electronic Signatures
Illinois provides for the validity of electronic records and electronic signatures in the Electronic Commerce Security Act[1] (the “Act”). In Illinois, information, records, and signatures are not to be denied legal effect, validity, or enforceability solely on the grounds that they are in electronic form[2].
“Written” or “In Writing”
How do electronic records and signatures meet writing requirements of a rule of law (i.e. statute, ordinance, common law rule, etc.) in Illinois? Where a rule of law requires information to be “written” or “in writing,” or provides for certain consequences if it is not, the Act states that an electronic record satisfies that rule of law[3]. Similarly, where a rule of law requires a signature, or provides for certain consequences if a document is not signed, an electronic signature satisfies the rule of law[4]. There are exceptions, however. For instance, an electronic record or signature will not satisfy a requirement that information be in writing and signed when the requirement relates to the creation or execution of a will or trust, living will, or healthcare power of attorney. Also, an electronic record or signature is not adequate for a record that serves as a unique and transferable instrument of rights and obligations (such as negotiable instruments and other instruments of title where possession confers title), unless the electronic record or signature is created, stored and transferred in a manner that allows for the existence of only one unique, identifiable, and unalterable original. In addition, that original can only be possessed by one person and cannot be copied except in a form that is readily identifiable as a copy[5]. Therefore, utilization of an electronic record or signature for negotiable instruments or the like must meet these specific rules in order to satisfy the rule of law.
Proving Electronic Signatures
How can you prove that an electronic signature is actually a unique signature? Under the Act, an electronic signature may be proved in any manner. This includes showing that a procedure existed by which a party must, of necessity, have executed a symbol or security procedure for the purpose of verifying that the electronic record was that party’s record prior to being able to proceed further with a transaction[6].
If Originals Are Required…
What if a rule of law specifically requires information to be presented or retained in its original form? An electronic record will satisfy this requirement if there reliable assurance exists as to the integrity of the information from the time the electronic record was first generated in its final form[7]. How is integrity assessed? Under the Act, integrity is determined by whether the information has remained complete and unaltered, apart from the addition of any endorsement or other information that “arises in the normal course of communication, storage and display.” Furthermore, the standard of reliability is assessed in the light of the purpose for which the information was generated and in the light of all the relevant circumstances[8].
Electronic Records and Electronic Signatures as Evidence
The Act discusses the admissibility of electronic signatures and records into evidence in a legal proceeding. Nothing in the application of the rules of evidence can apply to deny the admissibility of an electronic record or electronic signature into evidence on the sole ground that it is an electronic record or electronic signature, or on the grounds that it is not in its original form or is not an original[9]. In a legal proceeding, information in the form of an electronic record must be given due evidentiary weight by the trier of fact (the judge or the jury). In assessing the evidentiary weight when authenticity is at issue, the trier of fact may consider the manner in which the record was generated, stored or communicated; the reliability of the manner in which its integrity was maintained; the manner in which its originator was identified or the electronic record was signed; and any other relevant information or circumstances[10].
Retention
What if you are required by law to retain documents? Under the Act, where a rule of law requires that certain documents, records or information be retained, that requirement is met by retaining electronic records of such information in a “trustworthy” manner. This applies, provided that (i) the electronic record and information are accessible so as to be usable for subsequent reference at all times when the information must be retained; (ii) that the information is retained in a format in which it was originally generated, sent or received, or in a format that can be demonstrated to represent that information accurately; and (iii) information enabling the identification of the origin and destination of the information, the authenticity and integrity of the information, and the date and time when the information was sent or received, if any, is retained[11]. In addition, the Act specifies that it does not preclude Illinois agencies from specifying additional requirements for the retention of records that are subject to the jurisdiction of that agency[12].
Electronic Records and Signatures are Allowed, Not Required
Though the Act allows for electronic signatures and records, nothing in the Act requires them, and the Act reinforces that it does not prohibit any entity engaging in an electronic transaction from establishing “reasonable” requirements regarding the medium on which the entity will accept records, or the method and type of symbol or security procedure the entity will accept as a signature[13]. In addition, if any other statute or rule requires approval by an Illinois agency prior to the use or retention of electronic records or the use of electronic signatures, the provisions of that other statute or rule also apply[14].
[1] 5 ILCS 175/5-105, et seq.; [2] 5 ILCS 175/5-110; [3] 5 ILCS 175/5-115; [4] 5 ILCS 175/5-120(a); [5] 5 ILCS 175/5-115(b); 5 ILCS 175/5-120(c); [6] 5 ILCS 175/5-120(b); [7] 5 ILCS 175/5-125(a); [8] 5 ILCS 175/5-125(b); [9] 5 ILCS 175/5-130(a); [10] 5 ILCS 175/5-130(b); [11] 5 ILCS 175/5-135; [12] 5 ILCS 175/5-135(c); [13] 5 ILCS 175/5-140; [14] 5 ILCS 175/5-145
This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
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