Signing Contracts Electronically: Binding and Enforceable?

Woman sigining electronic receipt of delivered packageDo you conduct business transactions through e-commerce? Before you accept a credit card from a customer, or accept a client’s click-through of your Terms of Use, you need to understand what it means to sign a document online. Florida’s law concerning e-signatures is somewhat convoluted, with conflicting rules and regulations.

To start with, Article 2 of the Uniform Commercial Code (or UCC), codified as Chapter 672, Florida Statutes, applies to e-commerce sales of goods as well as brick-and-mortar transactions. Note that “sales of goods” does not include the sale of intangible goods, services, or real estate. Section 672 provides that a contract for the sale of goods for the price of $500 or more is not enforceable unless it is in writing, sufficient to indicate that a contract for sale has been made, and signed by the party against whom enforcement is sought. In other words, you’ve got to have a signature on a contract. But what is a “signature” when you are selling your stuff online?

The Electronic Signature Act of 1996 (ESA), Florida Statutes 668.001-668.006, defines an “electronic signature” as any manifestation of an intent to authenticate a writing, including “any letters, characters, or symbols.” So long as there is a logical connection between the “signature” and the writing, the writing is effectively signed. That can be an email signature, a click-through agreement with a check-box stating agreement, or any other digital action that shows consent prior to continuation with a transaction. But is that enough for the UCC? Probably not.

The ESA also defines a “digital signature” as an encrypted signature using an “asymmetric cryptosystem,” also known as public-key encryption. Using strong encryption to validate an electronically-signed document gives the signature the same force and effect as a hand-written signature under Florida law. A digital signature is capable of being verified with mathematical precision, where an unencrypted electronic signature is not verifiable at all. For that reason, we strongly encourage the use of public-key encrypted signatures for all online transactions.

Using strong Secure Sockets Layer authentication for Web sites and data transmissions along with public-key encryption will ensure that you meet the requirements of the UCC, as well as providing better security for your customers’ sensitive data.

No idea what all of that means? No worries. Ask your website developer to make sure your e-commerce site is properly secured and verified by service providers. Contact Meehle Law to schedule a consultation if you need a contract drafted or reviewed. We’d love to help!

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