I regularly have calls and e-mails about what is a “legal electronic signature”. This page contains expert opinion and links to copies of the two primary laws governing this question.
As a prelude, I keep in mind that E-Bay, Google, Amazon – all onlinecredit card transactions I have ever seen – only require you to check a box that says “I Agree” to indicate your signature. It is hard to believe that this act does not constitute a binding legal signature.
As a note – I am not a lawyer. My opinions are based on my understanding. The references I quote are respected in their field for this knowledge.
I have two main issues brought up in conversations aboutelectronic signatures…
- Can we, as a software company, set up our forms to allow you to enter a scanned signature in the signature fields?
- My insurance companies tell me they will not accept anything other than a wet signature.
Before I get to the actual laws, here are my gut responses…
- We, as a software company absolutely can set up a system that allows you to import scanned signatures into any field. However, that does not make your signature any more legal but it does add a lot of work and expense that accomplishes nothing from a legal stand point. In fact, as you will see below, it may actually weaken your position.
- You need to refer to your specific contract with each of your insurance companies to determine signature requirements. If your agency contract clearly defines these requirements, then I would think that agency contract would govern. If your agency contract does not clearly speak to the issue, or is silent on the issue, then the Federal and State laws probably apply and your insurance company has to accept any legal signature.
There are two acts which speak to electronic signatures.
Senate Bill S-761, the 2000 “Electronic Signature in Global and National Commerce Act”, sometimes referred to as E-SIGN.
The 1999 “Uniform Electronic Transactions Act”, UETA.
The first is an umbrella act from the federal government. The second has been adopted by almost all states to govern intra-state commerce.
Electronic Signatures and Insurance
It is most interesting to me that the Federal Law took the effort to specially address the Insurance Industry. Here is the Section…
“(i) INSURANCE. – It is the specific intent of the Congress that this title and title II apply to the business of insurance.
(j) INSURANCE AGENTS AND BROKERS. – An insurance agent or broker acting under the direction of a party that enters into a contract by means of an electronic record or electronic signature may not be held liable for any deficiency in the electronic procedures agreed to by the parties under the contract if –
(1) the agent or broker has not engaged in negligent, reckless, or intentional tortious conduct;
(2) the agent or broker was not involved in the development or establishment of such electronic procedures, and;
(3) the agent or broker did not deviate from such procedures.”
To me, this would seem to suggest that you are actually better protected by NOT USING A SCANNED IMAGE. I would think a scanned image would define you as having been “involved in the development or establishment of such electronic procedures”.
Here is a link to what Jim Whittier of the National Governors Association has written about the 2000 Electronic Signature in Global and National Commerce Act.
Susan Hepner Siegfried ( who serves as Senior Counsel in the Legal Division of the Virginia Housing Development Authority in Richmond, Virginia, and is a past Chair of the Real Property Section of the Virginia State Bar) says…
“E-Sign defines the term “electronic signature” as “an electronic sound, symbol or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” Id. § 7006(5). Under E-Sign, the use of a PIN number, a digital signature (usually defined as one using public key infrastructure technology), or any number of things, including a typed name, might be considered an electronic signature. From a contracting standpoint, what is relevant is whether the signature can be attached to the record, and whether it can be attributed to the person against whom enforcement is sought. The law does not require any person or entity to agree to use or accept electronic records or electronic signatures. Moreover, E-Sign and UETA are technology neutral, i.e. they do not endorse any particular technology.”
NOTE: The red color and bold print were added by me to emphasize this point.
Every signature field used in our Cap-Dat ACORD forms – the ones you can save on our servers – meets the criteria of being able to be attached to the record and logically associated with the contract – as long as you save that signed document on our servers.
Her entire article – 3 pages – is here…Susan Hepner Siegfried
Finally, here is a link to a very good page with additional links on Wikipedia.
I hope this is helpful and useful to you in using electronic signatures properly.