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  1. ESIGN 101 Ken Moyle Chief Legal Officer DocuSign, Inc. Margo Tank Partner BuckleySandler LLP David Whitaker Counsel BuckleySandler LLP

  2. The UETA • The state law solution – the Uniform Electronic Transactions Act • Created by NCCUSL • Overlay statute • Authorizes replacing writings with electronic records • Authorizes electronic signatures • Requires affirmative “opt-in” by parties -- but opt-in may be shown by surrounding circumstances

  3. The UETA • Problems with the UETA • Must be adopted by each state • Process can take years • States add non-uniform provisions • California • Doesn’t change federal law

  4. The Federal ESIGN Act • A federal solution -- the Electronic Signature In Global and National Commerce Act • Covers state and federal law • Instant 50 state baseline uniformity • Adopts the most significant UETA provisions • Provides specific standards for consumer consent • Sets boundaries for regulatory authority

  5. Scope of the UETA and ESIGN • Applies to the use of electronic records and signatures in virtually any business-to-business or consumer transaction, unless specifically excluded • UETA applies to state law • ESIGNapplies to state and federal law • Primary exclusions: • Wills, codicils and testamentary trusts • Funds transfers (covered by UCC Article 4A) • Letter of Credit (covered by UCC Revised Article 5) • Securities (covered by UCC Revised Article 8) • Security interests in goods and intangibles (covered by UCC Revised Article 9) • Software licensing laws (if State has adopted UCITA) • Most laws concerning checks

  6. Scope of the UETA and ESIGN • Included are: • Consumer protection laws • Laws governing real estate transactions (subject to special rules concerning documents to be filed of record) • Laws governing Insurance • Laws of agency • Laws covering powers of attorney • Laws requiring notarization of documents • Laws governing trusts (except testamentary trusts) • Laws concerning the submission of documents to, or issuance of documents by, government authorities (subject to special rules )

  7. Three Pillars of the UETA and ESIGN • A record or signature may not be denied legal effect or enforceability solely because it is in electronic form • If a law requires a record to be in writing, an electronic record satisfies the law • If a law requires a signature, an electronic signature satisfies the law

  8. Electronic Records Under UETA and ESIGN • “Record” means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form • All writings are records, but not all records are writings • “Electronic Record” is virtually any stored record that is not on paper

  9. Electronic Signature An “electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record”

  10. Electronic Signature • Includes: • traditional ink signatures • typed names • a click-through on a software program’s dialog box combined with some other identification procedure • biometric measurements • a digitized picture of a handwritten signature • a complex, encrypted authentication system

  11. Electronic Signature • Legal sufficiency vs. attribution • UETA answers the question “is it a signature?” • Does NOT answer the question “is it your signature?” • Attribution must be proven • May be proven by any means, including surrounding circumstances or efficacy of agreed-upon security procedure • Burden of proof is on person seeking to enforce signature • Non-repudiation is a legal condition, not a technology feature

  12. Electronic Signature • Intent and authentication • Signer must intend to “authenticate” a document at time of signing • Four basic purposes for authentication • I agree to it • It came from me • I’ve seen it • I got it • Purpose of signature derived from surrounding circumstances, just as on paper • Need “indicia of intent,” just as on paper

  13. The Federal ESIGN Act:Consumer Consent – A Closer Look • Special procedure required if statute, regulation or other rule of law calls for a writing to be provided to a consumer • Basic rules: • Consumer must affirmatively consent • Other party must provide disclosures prior to consent in clear and conspicuous statement • Consent must demonstrate ability to receive documents

  14. The Federal ESIGN Act:Consumer Consent – A Closer Look • Clear and conspicuous disclosure of: • Consumer’s right to have documents provided on paper • Consequences of withdrawal of consent • Fees • Termination of transaction • Scope of transaction covered by consent • Procedure for withdrawing consent and updating contact info • Procedure and fees for obtaining paper copies • Hardware and software requirements for accessing and retaining records

  15. The Federal ESIGN Act:Consumer Consent – A Closer Look • “Reasonable demonstration” • Consumer consent must • Be electronic or be confirmed electronically • Include a “reasonable demonstration” of consumer’s ability to access information in the electronic form(s) provided • Legislative history attempts to set standard • Test is not intended to “burden commerce” • Email confirming receipt of test files is sufficient • Failure to include “reasonable demonstration” in consent process may not be used as basis to invalidate contract • Query: How to handle transactions where consumer gets paper but business retains electronic records?

  16. Key Requirements • Key Requirements • Consent is required if law otherwise requires info delivered in writing • ESIGN Consumer Consent Process • B-to-B Consent • UETA delivery provisions not preempted by ESIGN • Need Agreement (express or implied) on Delivery Method • Need to deal with bouncebacks in many cases • Popular Delivery Options • Display as part of an interactive session, • Delivery in the body of an email or as an email attachment, or • Delivery of an email or other electronic notice that has a URL embedded in it that the consumer may activate to review the information.

  17. Key Requirements • More Key Requirements • Electronic records are not enforceable against a recipient if the sender inhibits the recipient’s ability to print or retain a copy • Recipient must be able to retain a copy for later reference • Electronic Records retained by sender must be accurate, remain accessible for later reference • U.S. Mail delivery requirements in law or contract “trump”ESIGN, and may prevent use of electronic records • All formatting, timing and display requirements must be observed. “Timing” includes: • Proper sequence within transaction • Any time frames or deadlines for delivery • Length of time the information/document remains accessible