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Question
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Ken
We use your contracts in our business.
We recently converted to an electronic work order system for our field installation and service technicians that enables them to capture customer signatures electronically on their smart phones.
A PDF of the Work Order is automatically emailed to the customer with the “Signature” and signer’s name attached as well as a summary of work performed and hours on the visit.
A copy of this same Work Order is also emailed to our office. Please let me know what language if any needs to be added to our Contracts, Proposals, Work Order’s etc. so that these electronic signatures are acceptable as proof/acceptance of work performed.
I just want to confirm that an electronic signature will hold up as proof of
acceptance by customer for work performed in instances where we may have to proceed with collections for non-payment, etc.
Thank you,
Dean R
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Ken
I use your contracts with great satisfaction.
I am considering implementing them into an electronic version so I can have the customer view it via an ipad, have him sign it via the ipad screen, and then email it to the customer and my office.
1) Is electronically viewed and signed contracts legally valid (I do business in Hawaii)?
2) Can we combine the all-in-one, the additional equipment disclaimer, 3 day, a call list form, equipment list, etc into 1 document, and then just sign once at the end?
3) If combining is okay, should I have the customer initial each page too?
I appreciate your email forum, and continue to learn more do's and don'ts. A reply or posting would help me know which category this falls into. Thank you in advance for your time in responding to my questions.
Mark
Aloha Alarm
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Answer
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The Uniform Electronic Transactions Act (UETA) was introduced primarily to
establish a nation-wide standard for the implementation and use of electronic
records and electronic signatures. UETA essentially states that “a record or
electronic signature may not be denied legal effect or enforceability solely
because it is in electronic format.” In effect, UETA allows almost all contracts to
be replaced with electronic versions of the same agreement so long as both parties consent to such a switch. It is worth noting however, that if another law requires a record to be (a) posted or displayed in a certain manner, (b) sent, communicated, or transmitted by a specified method, or (c) contain information that is formatted in a certain manner, the UETA will not alter or supersede those mandates.
To date forty-seven states, the District of Columbia, Puerto Rico, and the U.S.
Virgin Islands have adopted UEFA. While New York, Illinois, and Washington remain the only states that have not yet adopted UEFA, each has adopted statute(s) similar to UEFA that pertain to electronic transactions. (See e.g. New York: NY CLS State Technology § 301 et seq.)
For those states that have not yet adopted the UEFA, The Electronic Signatures in Global and National Commerce Act (ESIGN) remains the primary federal authority. Like UEFA, ESIGN effectively sets forth that any contract or other "record relating to such transaction" may not be denied legal effect, validity or enforceability solely because it is in electronic form.
While the two statutes vary in some respects, it is clear that under either act, assuming subscriber consent, most of the forms we provide, including the all-in-one contract, subsequent work orders, or service contracts can be presented to the consumer in electronic form and they will have the same legal effect as paper documents.
However, one possible exception to this rule may be the separate three-day notice of cancellation required by 16 CFR 429.1. According to the FTC, the separate notice of the right to cancel is not part of any contract, but is rather a stand-alone form that needs to be provided in accordance with the federal regulation. To comply with section 429.1, you must leave two copies of this notice of cancellation with the subscriber. While there is no explicit ban on providing this notice in a printable electronic format, problems may arise if subscribers allege that they did not consent to receiving their notice of cancellation in electronic form, or that they never received the notice at all. To help avoid these problems, if you wish to provide this notice in an electronic format, the subscriber should sign an acknowledgment certifying that he or she consents to receiving notice of cancellation by e-mail or some other means.
In the end, under either standard, it seems that all forms we provide, with the
possible exception/complication of the three-day notice of cancellation may be
given to the subscriber, assuming they consent, solely in electronic format.
THE SPECIFIC EXEMPTIONS INCLUDE THE FOLLOWING:
(a) Excepted requirements. The provisions of section 101 [15 USCS § 7001] shall not
apply to a contract or other record to the extent it is governed by--
(1) a statute, regulation, or other rule of law governing the creation and
execution of wills, codicils, or testamentary trusts;
(2) a State statute, regulation, or other rule of law governing adoption,
divorce, or other matters of family law; or
(3) the Uniform Commercial Code, as in effect in any State, other than sections
1-107 and 1-206 and Articles 2 and 2A.
(b) Additional exceptions. The provisions of section 101 [15 USCS § 7001] shall not
apply to--
(1) court orders or notices, or official court documents (including briefs,
pleadings, and other writings) required to be executed in connection with court
proceedings;
(2) any notice of--
(A) the cancellation or termination of utility services (including water,
heat, and power);
(B) default, acceleration, repossession, foreclosure, or eviction, or the
right to cure, under a credit agreement secured by, or a rental agreement for,
a primary residence of an individual;
(C) the cancellation or termination of health insurance or benefits or life
insurance benefits (excluding annuities); or
(D) recall of a product, or material failure of a product, that risks
endangering health or safety; or
(3) any document required to accompany any transportation or handling of
hazardous materials, pesticides, or other toxic or dangerous materials.
INFORMED CONSENT IS SPELLED OUT AS FOLLOWS:
(1) Consent to electronic records. Notwithstanding subsection (a), if a statute,
regulation, or other rule of law requires that information relating to a transaction
or transactions in or affecting interstate or foreign commerce be provided or made
available to a consumer in writing, the use of an electronic record to provide or
make available (whichever is required) such information satisfies the requirement
that such information be in writing if--
(A) the consumer has affirmatively consented to such use and has not withdrawn
such consent;
(B) the consumer, prior to consenting, is provided with a clear and
conspicuous statement--
(i) informing the consumer of (I) any right or option of the consumer to have the record provided or made available on paper or in nonelectronic form, and (II) the right of the consumer to withdraw the consent to have the record provided or made available in an electronic form and of any conditions, consequences (which may include termination of the parties' relationship), or fees in the event of such withdrawal;
(ii) informing the consumer of whether the consent applies (I) only to the particular transaction which gave rise to the obligation to provide the record, or (II) to identified categories of records that may be provided or made available during the course of the parties' relationship;
(iii) describing the procedures the consumer must use to withdraw consent as provided in clause (i) and to update information needed to contact the consumer electronically; and
(iv) informing the consumer (I) how, after the consent, the consumer may, upon request, obtain a paper copy of an electronic record, and (II) whether any fee will be charged for such copy;
(C) the consumer--
(i) prior to consenting, is provided with a statement of the hardware and software requirements for access to and retention of the electronic records; and
(ii) consents electronically, or confirms his or her consent electronically, in a manner that reasonably demonstrates that the consumer can access nformation in the electronic form that will be used to provide the information that is the subject of the consent; and
(D) after the consent of a consumer in accordance with subparagraph (A), if a change in the hardware or software requirements needed to access or retain electronic records creates a material risk that the consumer will not be able to access or retain a subsequent electronic record that was the subject of the consent, the person providing the electronic record--
(i) provides the consumer with a statement of (I) the revised hardware and
software requirements for access to and retention of the electronic records, and (II) the right to withdraw consent without the imposition of any fees for such withdrawal and without the imposition of any condition or consequence that was not disclosed under subparagraph (B)(i); and
(ii) again complies with subparagraph (C).
(2) Other rights.
(A) Preservation of consumer protections. Nothing in this title [15 USCS §
7001 et seq.] affects the content or timing of any disclosure or other record
required to be provided or made available to any consumer under any statute,
regulation, or other rule of law.
(B) Verification or acknowledgment. If a law that was enacted prior to this
Act [enacted June 30, 2000] expressly requires a record to be provided or made
available by a specified method that requires verification or acknowledgment
of receipt, the record may be provided or made available electronically only
if the method used provides verification or acknowledgment of receipt
(whichever is required).
(3) Effect of failure to obtain electronic consent or confirmation of consent.
The legal effectiveness, validity, or enforceability of any contract executed by
a consumer shall not be denied solely because of the failure to obtain electronic
consent or confirmation of consent by that consumer in accordance with paragraph
(1)(C)(ii).
(4) Prospective effect. Withdrawal of consent by a consumer shall not affect the
legal effectiveness, validity, or enforceability of electronic records provided
or made available to that consumer in accordance with paragraph (1) prior to
implementation of the consumer's withdrawal of consent. A consumer's withdrawal
of consent shall be effective within a reasonable period of time after receipt of
the withdrawal by the provider of the record. Failure to comply with paragraph
(1)(D) may, at the election of the consumer, be treated as a withdrawal of
consent for purposes of this paragraph.
(5) Prior consent. This subsection does not apply to any records that are
provided or made available to a consumer who has consented prior to the effective
date of this title to receive such records in electronic form as permitted by any
statute, regulation, or other rule of law.
(6) Oral communications. An oral communication or a recording of an oral
communication shall not qualify as an electronic record for purposes of this
subsection except as otherwise provided under applicable law.
Thanks to Maxwell Padwell, Esq., associate attorney at Kirschenbaum & Kirschenbaum researched and prepared this answer.