As the dynamics of technology are changing, traditional contract law has also been affected in the recent years. Prior to year 2000, electronic signatures faced numerous legal problems which challenged their authority. But under a federal law called the Electronic Signatures in Global and National Commerce Act (“ESIGN”), electronic signatures are just as valid and enforceable as those signed by the contracting party's own hand. As such, electronic contracts are now the same as traditional, paper contracts, with the exception that they are executed on the web or by using electronic media.
Generally, an agreement (i.e., a contract) is created when there is an understanding and acquiescence regarding the terms and conditions between the respective parties. There must be an offer, acceptance and consideration. As such, an electronic contract is formalized when the parties (i.e., two individuals or entities) show their consent to the material terms, which is memorialized in a written document. The consent can be either express or implied. For example, it is express when the user enters his/her name in the “I Agree” button on the website. It can also be implied if the user continues to use the website with the understanding that by using the website he/she has accepted its terms and conditions.
The readers must be advised that the UETA includes a list of transactions that are not covered by its terms. Stated otherwise, there are certain transactions which will not be given legal effect if finalized electronically. Obviously, providing a comprehensive list would be lengthy. Nevertheless, the following items should provide a better understanding of the types of excluded transactions:
- Wills, codicils or testamentary trusts
- Transactions involving negotiable instruments
- Bank lending transactions
- Foreclosure and eviction notices
- Consumer matters (e.g., credit reporting, and medical information release forms)