A recent decision by the California Court of Appeal for the First District confirms the importance of intent when arguing that an e-signature is valid and enforceable.
In JBB Investment Partners Ltd. et al. v. Thomas Fair et al., the defendant was accused of fraud. The plaintiffs' lawyer sent an email that offered to settle, and the defendant responded in kind. Counsel for the plaintiffs thought that the defendant's initial reply was unclear and thus replied "Please be unambiguous." The plaintiffs' counsel also expressed his intention to file a complaint unless unambiguous acceptance was received. He later filed the complaint, which was followed quickly by an email from the defendant saying, "I said I agree." A response from the plaintiffs confirmed agreement to move forward with settlement terms. The defendant's final email stated, "I have accepted by phone and [email]. Stop proceeding. I said accept which is the same as 'agreed.' You must stop and you must tell the court we have an agreement."
Later, the defendant refused to sign the settlement paperwork, claiming that he had changed his mind and that his name on the email was not a signature to a settlement agreement. The trial court sided with the plaintiffs and found that the correspondence and the defendant's name affixed to his messages, coupled with a related voicemail, was in fact an "electronic signature" under the Uniform Electronic Transactions Act (UETA) adopted by California as part of its Civil Code.
The UETA states that an electronic signature satisfies the signature requirement where a signature is required by law. The act requires intent in order for "an electronic sound, symbol, or process attached to or logically associated with an electronic record" to meet the signature requirement. Further, an electronic signature is considered linked to a person "if it was the act of the person." Forty-seven states have adopted a version of the UETA.
Although the defendant's name was printed at the end of his emails, the Court of Appeals determined that the record did not adequately show that the defendant printed his name with the required intent to sign, highlighting the lack of a stated agreement by the parties to enter into final settlement negotiations electronically. Absent a valid signature, the court reversed the trial court's decision to enforce the settlement agreement, finding instead that an enforceable agreement did not exist.
Although the JBB decision does not offer a bright-line rule regarding e-signatures, it does underscore the importance of ensuring that parties to an agreement familiarize themselves with their state's e-signature laws and clearly agree to conduct their transaction electronically.