Can an Electronic Signature Form a Contract in Tennessee?

Did you know that in most cases courts will recognize an electronic signature, and enforce contracts “signed” and created by e-mail exchange?

Oral vs. Written Contracts – Intro

Contrary to popular belief, a contract doesn’t always have to be in writing to be enforceable. Indeed, as explained in one of our prior blog posts,  a court will enforce an oral agreement except in cases involving certain types of contracts that are required to be in writing and signed by the parties.

Of course, even though an oral contract might technically be enforceable, there are plenty of reasons to get an agreement in writing.  Written contracts cut down on “he said, she said” disputes over exactly what was verbally agreed to.  Written contracts are also obviously preferable for any agreement that involves even a hint of complexity.  And, as noted above, in some instances a written contract with signatures in actually required pursuant to the Statute of Frauds.

So, then, how is a written contract actually formed and then signed?  Is there some formal scroll paper or signing ceremony where all the parties get together and take turns using the same quill pen and ink?

Hardly.

Forming a written contract can be as simple as exchanging an e-mail with typed written names at the bottom in a signature block.

Uniform Electronic Transactions Act

In 2001, Tennessee adopted the Uniform Electronic Transactions Act (UETA) to facilitate and govern transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct. Tenn. Code Ann. 47-10-105 (a)-(b).

Under Section § 47-10-107  of the Act,

(a)  A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.

(b)  A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.

(c)  If a law requires a record to be in writing, an electronic record satisfies the law.

(d)  If a law requires a signature, an electronic signature satisfies the law.

What is an Electronic Signature?

So what constitutes an electronic signature?  Pursuant to the UETA, an “electronic signature” is  “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” Tenn. Code Ann. § 47–10–102(8).  This can be accomplished simply by typing your name to the end of an email.  Here’s an example:

• John Doe sends the following e-mail: “I hereby offer to buy 100 widgets for $1,000, delivery next Tuesday. Sincerely, John Doe”

• Jane Brown responds as follows: “I accept your offer to purchase 100 widgets for $1,000, delivery next Tuesday. Best, Jane Brown”

This transaction is binding despite the fact there is no pen and ink “writing” or “signature.”

Does an Attorney’s Signature Qualify?

Yes. The signature of a party’s attorney is sufficient to meet the requirement of an electronic signature that binds the client. On this issue, the Tennessee Supreme Court in Waddle v. Elrod, 367 S.W.3d 217 (Tenn. 2012) explained as follows:

[A]lthough [the party] did not sign the email, there is no dispute that [her attorney] was acting as her agent when he negotiated the settlement. Had he written his signature on a printed version of the email, rather than typed his name at the end of the email, his signature would undoubtedly have been sufficient to satisfy the Statute of Frauds. The UETA, recognizing that all sorts of transactions are now routinely conducted by electronic means on a daily basis, obviates the need for a handwritten signature. [The attorney’s] typed name at the end of the email constitutes an “electronic signature.” Tenn. Code Ann. § 47–10–107(d). As the agent of [the party], [the attorney’s] electronic signature on the email confirming the terms of the settlement agreement satisfies the signature requirement of the Statute of Frauds.

Be Careful

Take great care when you conduct negotiations via e-mail, and you have your e-mail set up to include an automatic signature block.  If you don’t intend for your e-mail to constitute a formal offer or acceptance of an agreement, be clear about it so you don’t wind up facing an argument that you formally entered into an agreement when you never intended to.

Bottom Line

In most cases, handwritten ink signatures aren’t required and you do not have to have an original signature for a contract to be effective.

Need a Contract Lawyer?

We are contract lawyers in Tennessee. If you need help enforcing an agreement or contract, or if someone is wrongfully alleging that you entered into a contract, please contact us at 901-372-5003. Each case is unique and we can advise you based on your individual circumstances.

Patterson Bray PLLC

8001 Centerview Parkway, Suite 103

Memphis, Tennessee 38018

(901) 372-5003 Office

www.pattersonbray.com