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CONTRACTS IN THE ELECTRONIC AGE

Acknowledging the changing times back in 2000, Congress first passed the Electronic Signatures in Global and National Commerce Act (also known as “E-Sign”) for the purpose of validating electronic contracts and signatures.  The federal E-Sign legislation is the body of laws that govern interstate and foreign commerce.  Following suit, North Carolina has adopted its own version of electronic signature legislation, the Uniform Electronic Transactions Act (also known as “UETA”).  UETA is the collection of laws that permit and govern electronic contracts and signatures between private parties in North Carolina.  See North Carolina General Statutes Chapter 66, Article 40.

What Legal Effect is given to Electronic Documents in North Carolina?

UETA allows for the use of electronic documents and electronic signatures where the parties to a transaction agree to use electronic means.  Whether parties to the transaction “agree” to conduct a transaction by electronic means is determined from the context and circumstances, including the parties’ conduct.  When parties do agree (through express agreement or conduct) to conduct a transaction through electronic means, the parties cannot thereafter refute the enforceability of a contract simply because it is electronic.  UETA’s authorization to utilize electronic contract documents also extends to electronic signatures to contracts, so long as the parties agree.  UETA is elective and does not require that any particular documents or signatures be electronic; utilization and protection under UETA is purely elective.  In order to be given full legal effect, the records, contracts, or signatures must be able to be retained by the recipient (i.e. printed or stored electronically) and must be able to be accurately reproduced at a later date.  If the sender inhibits the ability of a recipient to store or print an electronic contract, the electronic contract is not enforceable against the recipient.

What Types of Contracts or Signatures Can Be Electronic in North Carolina?

UETA permits the use of electronic records and electronic signatures in nearly all transactions where the parties to the transaction agree to the use of electronic documents.  Excepted from North Carolina’s UETA statute are wills, codicils or testamentary trusts.  It also precludes the use of electronic documents related to the cancellation of utility services, notices of default, repossession, foreclosure or eviction, notices of the cancellation of health or life insurance benefits and documents related to the transportation of hazardous materials.

What about Notarized Documents?

In those instances where the transaction requires a notary, acknowledgment, verification or oath, the requirement is satisfied if the electronic signature of the person authorized to perform the notarization or verification, together with all other information required by applicable law, is attached or associated with the signature of record.

When is an Electronic Contract Effectuated?

An electronic document qualifies as “sent” as soon as it is addressed or directed to the recipient (i.e. when an e-mail is sent).  The electronic record qualifies as “received” as soon as it enters the information processing system of the recipient, so long as it is in a form that the recipient can receive.  This does not mean that the recipient need to be aware of receipt nor review the document, so long as the parties previously agreed to the use of electronic transactions.

In the end, it is only in rare circumstances that the citizens and businesses of North Carolina are prohibited from conducting their transactions electronically.  If you have additional questions relating to the formation and enforceability of electronic contracts or signatures, please contact our office.