E-Signatures and E-Transactions: Do They Stick?

E-SignaturesIn an era where everything is electronic, you have already signed a contract or completed a transaction electronically, even if you are not aware of it. Ever ordered online from Amazon? That’s an e-transaction. Have you ever negotiated with a customer and come to the terms of an agreement through e-mails? There’s another. What sticking power does an e-signature or e-transaction have, and what issues should you be aware of surrounding them? In part one of this two-part series, we will discuss e-signatures and e-transactions in Wisconsin and highlight issues you should consider in your electronic business transactions. We will then look at Illinois in part two at a later date.

E-Signatures and Transactions are Valid

Wisconsin provides for the validity of documents and transactions completed electronically. In Wisconsin, a record or signature may not be denied legal effect or enforceability solely because it is in electronic form. Similarly, a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation. And in Wisconsin, if a law requires a record to be in writing, or requires a signature, an electronic record or signature satisfies that requirement. Therefore, in Wisconsin, your electronic signature or record is as good as a paper signature or record, and an electronically-formed contract will be binding unless it is invalid for other reasons. See Wis. Stat. § 137.15.

Consent is Required

Do you, as a party to a transaction, have to consent to the transaction being an electronic one? Yes. The Wisconsin statute applies only to parties who have agreed to conduct transactions by electronic means. Therefore, if you are looking to conduct transactions with a customer by electronic means in Wisconsin, be sure to obtain a record of the customer’s approval. In addition, a party that agrees to conduct one transaction by electronic means may refuse to conduct other transactions by electronic means, and this right cannot be waived by agreement of the parties. See Wis. Stat. § 137.13.

Sending Information in Writing

What if you are required to send or deliver information in writing to another person under law? The Wisconsin statute sets forth that if the law requires a person to provide, send or deliver information in writing to another person, a party may satisfy the requirement with respect to that transaction if the information is provided, sent or delivered in an electronic record capable of retention by the recipient at the time of receipt. An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record. Therefore, if you have a duty under law to send or deliver written information relating to the electronic transaction, be certain that your information processing system allows the recipient to print or store the electronic record. See Wis. Stat. § 137.16.

Notarizing a Document Electronically

Can an electronic record be notarized if required? In Wisconsin, if a law requires a signature or record to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to administer the oath or to make the notarization, acknowledgement or verification, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature of record. See Wis. Stat. § 137.19.

Automated Transactions

Not every electronic transaction is going to be one where the parties are discussing and negotiating terms immediately prior to the transaction. What about automated transactions? In Wisconsin, a contract may be formed by the interaction of electronic agents of the parties, even if no individual was aware of or reviewed the electronic agent’s actions or the resulting terms and agreements. And a contract may be formed by the interaction of an electronic agent and an individual, whether that individual is acting on his/her own behalf or for another person, including in situations in which the individual i) is free to refuse to perform and ii) which the individual knows or has reason to know will cause the electronic agent to complete the transaction or performance. See Wis. Stat. §137.22.

Errors in a Transaction

Though some might say computers are less likely to err than humans, we have all experienced electronic error from time to time. What happens if a change or error occurs in a transmission between parties to a transaction? Wisconsin law is specific. If the parties have agreed to use a security procedure to detect changes or errors and one party has conformed to the procedure, but the other party has not, and the nonconforming party would have detected the change or error had that party also conformed, the conforming party may avoid the effect of the changed or erroneous electronic record. See Wis. Stat. §137.18. The take home: if you have agreed to use a security procedure in this context, be certain to use it.

If the error is in an automated transaction involving an individual, the individual may avoid the effect of an electronic record that resulted from an error made by the individual in dealing with the electronic agent of another person if the electronic agent did not provide an opportunity for the prevention or correction of the error and, at the time the individual learns of the effort, the individual i) promptly notifies the other person of the error and that the individual did not intend to be bound by the electronic record received by the other person; ii) takes reasonable steps (including steps that conform to the other person’s reasonable instructions) to return to the other person or, if instructed by the other person, to destroy the consideration received, if any, as a result of the erroneous electronic record, and iii) has not used or received any benefit or value from the consideration, if any, received by the other person. See Wis. Stat. §137.18. In other words, an individual erring in an automated transaction must contact the other party immediately and take steps to rectify the error. Time is of the essence in correcting these mistakes.

In Wisconsin, your e-actions can have significant e-consequences. In our next blog, we will investigate how Illinois law handles the business sector’s diminishing reliance on paper and increasing affinity for electronic everything.

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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