Changes in Washington Practice Report (#11) / Validating digital signatures

February 12, 2014

health-care-lawThis is installment #11 in a continuing series of Changes in Washington Practice Reports.

There are a number of issues that may be raised regarding digital signatures in general, including the authority presented by a digital signature (and what to do about hacked signatures); misdirected signatures that do not correctly link up with the agreement being executed; and potential “insider” misuse of such authorization.

New materials regarding the validation of digital signatures has been included in the 2013 Supplement to Uniform Commercial Code Forms by Shattuck and Cosway, volumes 7 and 8 of Washington Practice.

Searches for such materials can take place by direct reference to volumes 7 and 8, or by reference to Methods of Practice and the related summaries of clauses for forms under sections 1-201 and 1-204.

As noted by the authors of the 2013 Supplement to volume 7, under section 1-201, Form 4:

“A majority of the states with the exception of Georgia, Illinois, New York and Washington have adopted the Uniform Electronic Transaction Act (UETA).”

“The primary objective behind this Act…was to ‘establish the legal equivalence of electronic records and signatures with paper writings and manually-signed signatures, removing barriers to electronic commerce’”.

The UETA generally applies to “UCC Articles 2 (Sales), UCC Article 2A (leases) and the statute of frauds for personal property”.

“The UETA does not otherwise apply to UCC-covered transactions.”

“The federal…’E-Sign Act’ applies to any transaction affecting interstate or foreign commerce….and applies to section1-101 and Articles 2 and 2A” of the UCC.

Washington law is thus to be distinguished from the law in most other states.

This situation provides a challenge to the widespread use of digital signatures in electronic commerce.

Attorneys and commercial enterprises must remain aware of when digital signatures may be used—and when they may not be used.

The clauses used in “validating digital signatures” included in the Supplement deal with the intent of the parties to enter into a digitally-executed contract, according to alternative criteria.

Attorneys can search for needed resource materials by reviewing the individual volumes of Washington Practice, or by starting with the summaries and search strategies available in Methods of Practice.