Earlier this week I received the following email from a reader:
Could you please do a post about your thoughts on enforcing contracts that use faxes or pdf scans as the only proof of the other party’s acceptance? People seem very reluctant to send ink-on-paper originals these days. The Uniform Electronic Transactions Act (adopted in almost every state) seems to say that e-signatures are okay, but are scans or faxes of the signature enforceable?
I try to avoid reinventing the wheel, so I consulted someone whom I was sure would be able to give me a quick and reliable answer, namely Jason Lemkin, CEO of Echosign, the signature-automation company. With the disclaimer that Jason isn’t providing legal advice, here’s what he had to say:
Fax signatures are probably the primary way contracts are signed today, and broadly speaking, basic contract law recognizes a large variety of signature types where a mark or sign is made with an intent to subscribe to the terms of an agreement. Thus the question posed is the right one—not are fax signatures and pdf signature pages valid to indicate assent to the term of a contract—they generally are—but are they enforceable. More specifically, the question is whether they satisfy the Statute of Frauds, which provides that in order to be enforceable, certain types of agreements must be evidenced by a writing signed by the party to be charged.
Over the years, courts have concluded that telegrams, telexes, telecopies, facsimiles, and e-mails are writings satisfying the Statute of Frauds. But to eliminate any uncertainty, a majority of states have gone further and explicitly adopted legislation allowing the introduction of fax signatures into evidence for disputes involving routine business transactions. However, not all have taken this extra step. The federal government and the UETA have actually gone further in the case of electronic signatures, deeming most electronic signatures meeting their provisions equivalent to written signatures.
To avoid any uncertainty, many contracts often include a simple explicit provision stating that the parties agree to signature both in counterparts and by facsimile.
Ultimately, there is an inherent trade-off between expediency and the highest standards of authentication. A notarized document is a higher standard than an unnotarized document, and arguably, it might be easier to prove the validity of a wet-ink signature than a degraded fax signature or a pdf scan. That trade-off has meant that the majority of routine business deals done remotely are signed by fax today (with more and more electronically signed), but higher value and less routine deals remain the province of wet-ink and, in some cases, notarized signatures.
There you have it. I’d add a couple of thoughts. First, I’d generally prefer to send, and to receive, scanned and emailed signature pages rather than fax signature pages. And second, the only way to challenge a fax or scanned signature page would be to allege that it was forged. Given that in any mainstream transaction email would probably provide plenty of evidence regarding what had been agreed to and what stage the transaction had reached, the odds of someone being able to get away with forgery, or attempting to get out of a deal by dreaming up a claim of forgery, would seem slim.