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.
By the way, last May I posted this item about EchoSign. And EchoSign was in the news recently, as they raised $6 million of financing.
15 thoughts on “Enforceability of Fax and Scanned Signature Pages”
Another commonly used practice is for counsel to obtain signature pages from the client while the deal is still moving, and holding them until the final version is agreed on. The signature page (which is a stand alone page) is then affixed to the body of the final version.
This method is extremely convenient for transactional lawyers and their clients. However, there’s bound to be a situation where party A affixed the signature pages to the wrong version of the document.
I remember in my days in private practice sending out an e-mail at the conclusion of the deal with all the documents adobed in “closing book” form so that there was a record of what the deal was, and that later it couldn’t be argued that version 10 was actually the wrong version.
My two bit answer to the original question: yes, subject to the exact same evidentiary requirements that always exist in a contract dispute.
For electronic versions of signatures (and contracts), thanks in part to state and federal laws (E-SIGN), the questions of validity and enforceability are basically the same as they are for traditional signatures: whether one can attribute the signature to the other party and whether one can show that the ‘signature’ was intended to be a ‘signature.’
Traditional signatures, whether scanned or faxed, (while sufficient) are not necessary for the enforceability of that contract. Among other things, the definition of signature in state and federal laws include the word “process.” So, for example, a click of a button, attaching some secure signature technology, typing your name like /Mike/, etc. can all be sufficient and effective for a valid, enforceable contract. Again, the only question is whether you can attribute the “process” or other “signature” to the party you intend to bind.
Also, JHK’s practice of obtaining signatures early [Note by KAA: JHK mentioned this practice but didn’t advocate it], I would imagine, suffers from innumerably more problems than any electronic signature/contract would suffer.
It may be less than ideal, but this practice (speaking from experience) is common in even the most white-shoe firms. Signature pages are exchanged by counsel and held “in escrow,” and are not released until the parties agree on the final version…which often isn’t until the wire deadline. I preface this with that most often it happens with routine closing documents.
Folks, “fax signatures” are near non-existent today, except for the stuck up East Coast companies and in certain industries (real estate, travel, etc.) that still have fax machines. The dominant method of signature is by .pdf and email with original to follow. Most contracts have a provision that says that is the execution method.
“Signature pages” are just stupid (or for people who cannot afford scanners). They are great for litigators who want to argue for weeks over the parameters/scope/terms of the contract. “Signature pages” are a 1980s holdover to when people paid long distance charges to send long faxes. (Hint: No one much sends faxes today.)
I agree that whether the signature/mark/present intention to adopt is enforceable is a simple issue that has been about since the beginning of contractual time.
Being brand new to contract drafting, I’d be very interested in seeing a clause or two that explicitly allow transmission by .pdf and email. The clauses that I have reviewed all deal with fax transmission only. Any model clauses on this point?
I have always wondered how this works…an agreement with fax/email signature providing for the acceptability of fax/email signatures.
Could somebody please enlighten me?
I agree with Kurt that the trend is to send signed documents by .pdf file followed by an original as opposed to faxes, which are becoming obsolete (though I disagree with his East Coast observation). And I believe the quality of .pdf files — especially color — are superior to faxes. We all need to remember, moreover, that the “best evidence rule” is a rule of preference, not preclusion, and thus the authenticity issue should only surface if there is a legitimate question regarding the reliability of the .pdf signature (e.g., one can easily cut and paste a .pdf signature).
To respond to TGD’s comment, I generally put in language (in the notice section of a contract) that acceptable notice includes email followed by fax or regular mail. There is no magic phrase one needs to use, and it really depends upon the extent to which your company relies upon email, your business needs, how quickly you want to send or receive a notice and the level of risk associated with electronic notice. At some companies, not all employees might have access to or use email routinely. Thus, whatever language you choose should reflect how your company operates on a daily basis and any particular needs.
TGD, we simply add to the counterparts section something along the lines of:
“Delivery of an executed counterpart of a signature page to this Agreement by fax or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.”
David Colman, I agree that it seems to be a conundrum, but then again doesn’t the same issue arise with regard to reps as to authority to sign the document, etc.?
Old thread but a bridge I am just drafting across. I include below my first attampt to incorporate .pdf as well as fax as valid signatures. What i find amusing (or troubling) is that if this language is truly required to enable validitiy of such signatures, and the first signing of any document is by fax/scan, isn't there a problem with the fact that the enabling language being ratified by the fax/scan signature (in other words how can a signatory ratify fax signature acceptability by providing a fax signature! )
ACCEPTANCE OF FACSIMILE AND SCANNED SIGNATURES. The parties agree that this Agreement, agreements ancillary to this Agreement, and related documents to be entered into in connection with this Agreement will be considered signed when the signature of a party is delivered by facsimile transmission or delivered by scanned image (e.g. .pdf or .tiff file extension name) as an attachment to electronic mail (email). Such facsimile or scanned signature must be treated in all respects as having the same effect as an original signature.
An emailed page is less secure than an electronic fax page.
Actually, AETNA insurance company wanted a faxed or USPS mailed copy of a death certificate and would not accept a pdf through email this year!
I signed a letter of agreement to not communicate with a certain person until a given date. The person writing the letter changed the date without me re-signing it, they simply used a common method to transfer my signature to the new letter with the changed date. Was this legal of them and is the new date binding?
And right there is the problem which nobody wants to address. Especially big businesses who only care about cost effective expediting and convenience. The validity of a legal transaction means nothing where greed is concerned, and it’s an issue that will wreak havoc for everyone at one time or another. Sooner or later the issues that come with making things easier will prove it’s platform and rear it’s ugly head.
Massive wide spread fraud should be expected anytime the doors are open for it to occur. Anyone can simply copy & paste any signature on any document they want at any time. And that should scare the crap out of everyone.
(I know I’m reaching back to a super old comment)
It’s been possible to do this for decades – have we seen massive fraud? I can copy and paste anyone’s signature, but in actual practice has anything like this happened?