We're living in a digital world and contracts exist orally, in written form, they can also be implied, but how do you deal with contracts that may be in wiring but they're being exchanged electronically? In this lesson, we're going to talk about electronic contracts. As you know, a contract is a voluntary agreement between two or more parties that is legally enforceable. In this lesson, there are two statutes that we're going to talk about, the Uniform Electronic Transactions Act or the UETA, the E-Sign Act, and then we'll spend some time talking about Click-wrap and Shrink-wrap agreements. The UETA, it's a uniform law that's been adopted by several states here in the US. It has certain requirements around modeling electronic contracts with what we are familiar with in terms of written contracts. Here are the provisions that are key to keep in mind. First, the UETA says that any electronic document or signature has the same legal effect as is it would have if it was a written document. If you're sending an email or a Word processed document, it has the same effect as it was if that was a printed document. A legal contract can be formed electronically. So if I make an offer to you via email and you accept that via email, it has the same effect of me speaking orally to you making the offer and you accepting it orally. Also, electronic records satisfies the in writing requirements. There's a legal concept called the statute of frauds, which actually requires certain types of agreements to be in writing. What the UETA says is, well, if that writing is in electronic form, if it's a Word processed document or if it's an email, it satisfies the requirements of the statute of frauds. The UETA also says that electronic signatures are enforceable. In the written world, where you have a physical signature, having electronic signature has the same legal effect under the UETA. As I said, many states have adopted this and it applies to intrastate activity, so activity within a state, interstate, so activities across state lines, as well as activities between domestic companies here in the US and foreign companies. Those transactions are also covered by the UETA. Then there is a federal statute called the E-sign Act. The E-sign Act, because it's a federal statute and some limitations that Congress has in terms of being able to only regulate interstate commerce, the E-sign Act only applies to interstate transactions as well as transactions with foreign companies, so foreign transactions. The E-sign Act essentially has the same provisions as the UETA, but in addition to that, the E-sign Act says that emails may constitute electronic signatures as long as the elements of a contract are satisfied. The thing I want to point out here is, the E-sign Act is quite broad, the UETA is quite broad, and the spirit of these two statutes is around trying to model the world that we live in today. What we do know is that the law is still evolving. Well, we know the law says that emails may constitute an electronic signature or you can have a contract via email, what about via instant message or via text message? It's unclear. But one of the things that you want to keep in mind though is that the law is evolving and there are laws around how contracts may be formed over digital communications, over electronic communications. If you're having agreements with parties, and those agreements are required to be in writing, text messages, or instant messages, or emails may actually establish the requirements for written contracts. Keep that in mind as you're engaging with third parties on agreements in connection with your business. Now, there are some exclusions to the UETA and the E-sign Act where electronic documentation or electronic signatures will not suffice. Here's a couple of examples here. Wills and trusts won't count. Anything involving family law. So child custody or marriage or divorce, those things can't be done electronically, they still must be done in physically written documentation. Then, things like cancellation of utility services. The E-sign Act requires that cancellation of utility services be in a written document and not be satisfied in electronic form. Just to wrap up here, contracts bring predictability, clarity, and accountability to your business operations. While we are familiar with common forms of contracts, oral contracts or written contracts, or even implied contracts, the law is evolving around how those things are represented in electronic form. Electronic contracts have the same legal effect and effectiveness as paper contracts. Before you get into figuring out whether electronic communications may satisfy these, you may want to consult with a lawyer, particularly with respect to how this type of law applies in international jurisdictions.
