Traditionally, the authenticity of wet-ink signatures could be proven with direct evidence like testimony from (1) an eyewitness, (2) a witness familiar with the signatory’s handwriting, or (3) an expert.[1] However, these tried-and-true means of authenticating wet signatures are often inapplicable to electronic signatures.[2]
In today’s digital age, electronic signatures have become increasingly prevalent in business transactions, offering convenience, efficiency, and cost savings. However, questions arise about their enforceability. In this blog post, we’ll delve into the legal framework surrounding electronic signatures in Texas and explore how businesses can ensure the validity and enforceability of electronic agreements.
Understanding Electronic Signatures
Electronic signatures, or e-signatures, encompass various methods of signing documents electronically. An electronic signature includes an “electronic sound, symbol, or process attached to or logically associated with a record” that is “executed or adopted” by the signatory.[3] In Texas, electronic signatures are generally governed by the Uniform Electronic Transactions Act (UETA), which provides a legal framework for electronic transactions and signatures.[4]
Enforceability under Texas Law
Under the UETA, electronic signatures are considered legally equivalent to handwritten signatures, provided certain criteria are met. These criteria include:
Intent to Sign: The signer must demonstrate an intent to sign the document electronically.
Consent to Electronic Signature: All parties involved must consent to using electronic signatures. This does not need to be contained in a separate agreement and may be inferred from the factors surrounding the transaction.[5] Nevertheless, it is best to clearly outline the use of electronic signatures in the contracts and agreements and ensure that all parties explicitly consent to electronic signing.
Attributable to the Signor: The signature must be attributable to the signer.[6] Implement procedures to verify the authenticity of electronic signatures, such as requiring signers to authenticate their identity through multi-factor authentication methods[7] or by requiring unique credentials that can be attributed to the signor.[8]
Security Procedures: Some security measures must be in place, including, but not limited to, “algorithms or codes, identifying words or numbers, encryption, callback, or other acknowledgment procedures.”[9]
In Texas, an electronic signature cannot be invalidated solely because of its electronic form.[10] A party seeking to contest an electronic signature should be prepared to present evidence that the security procedures or platform utilized by the parties lacks integrity or efficacy in such a way that it cannot be reliably attributed to the signatory.[11]
If a party contesting their electronic signature fails to present evidence that the e-signature was fraudulent or unreliable, the court must enforce the agreement.[12]
Practical Considerations for Businesses
While electronic signatures offer numerous benefits, businesses should exercise caution to ensure compliance with legal requirements and mitigate potential risks. Here are some practical considerations:
Use Reliable E-Signature Software: Invest in reputable e-signature software that complies with industry standards and offers robust security features to safeguard against tampering or unauthorized access.
Recordkeeping Practices: Establish secure recordkeeping and retention practices to ensure the integrity and accessibility of electronic records containing electronic signatures in compliance with legal retention requirements.
By adhering to these requirements, businesses can ensure the enforceability of electronic signatures in Texas.
Conclusion
Electronic signatures offer a convenient and efficient way to conduct business transactions in today’s digital world. By understanding the legal framework surrounding electronic signatures in Texas and implementing best practices for their use, businesses can confidently embrace electronic signatures while ensuring the enforceability and validity of electronic agreements. Adopting electronic signatures streamlines business processes and positions organizations for success in an increasingly digital marketplace.
[1] See Aerotek, Inc. v. Boyd, 624 S.W. 3d 199, 204–5 (Tex. 2021).
[2] Id.
[3] Tex. Bus. & Com. Code § 322.002(8).
[4] See Tex. Bus. & Com. Code § 322.
[5] See Solcius, LLC v. Meraz, No. 08-22-00146-CV, 2023 WL 2261414 *6 (Tex. App.—El Paso Feb. 27, 2023, no pet.).
[6] Aerotek, Inc, 624 S.W. 3d at 205.
[7] See Alorica v. Tovar, 569 S.W.3d 736, 742 (2018).
[8] Aerotek, Inc, 624 S.W. 3d at 206.
[9] Aerotek, Inc, 624 S.W. 3d at 205.
[10] See Tex. Bus. & Com. Code § 322.007.
[11] Aerotek, Inc, 624 S.W. 3d at 210.
[12] See Solcius, LLC v. Meraz, No. 08-22-00146-CV, 2023 WL 2261414 *5 (Tex. App.—El Paso Feb. 27, 2023, no pet.).
