Legal Compliance Obligations For Executing Documents Electronically
As the Coronavirus pandemic continues, requiring social distancing into the summer months, it is a good time to review procedures and methods available for persons to sign and execute documents electronically, without the need for face-to-face interactions. Two laws primarily govern the electronic signature of documents: The Electronic Signature in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA). Both of these laws allow for the use of electronic signatures, where ESIGN is a federal law, and UETA is a uniform law adopted by many states. Nebraska has adopted UETA as Neb. Rev. Stat. §§ 86-612 et. seq. Effectively, these laws provide that a contract having a digital signature cannot be denied legal effect solely because it is not in paper form. Notably, however, under Nebraska’s form of UETA, certain documents including wills, codicils, testamentary trusts, and certain negotiable instruments and other transactions subject to the Uniform Commercial Code, are not eligible for electronic signatures.
Organizations looking to adopt the use of electronic signatures must follow several prescriptive procedures required by ESIGN and UETA. The specific implementation of these procedures is tailored to each organization, but, in general, the procedural requirements include:
- Demonstrating that the consumer affirmatively consents to the transaction, including the use of their electronic signature.
- Verifying the consumer has the specific hardware and software requirements needed to access their electronic records before collecting the consumer’s valid consent.
- Informing the consumer in a clear and conspicuous manner that they have the right to have their electronic record provided to them in paper form, and that the consumer has the right to withdraw their consent to the use of electronic signatures or records on future documents.
- Retaining the record with an attributable signature that is accessible at all times to anyone with a legal right to access it, where the record accurately reflects the information in the original contract.
In addition to electronic signatures, some transaction documents also require a notary’s signature. While a notary’s signature traditionally requires the signer to be physically present with the notary and the notary’s wet signature, two laws work together to allow notary signatures to occur electronically, with the signer located remotely. First, Nebraska’s Electronic Notary Public Act (Neb. Rev. Stat. §§ 64-301 et. seq.) allows the use of electronic signatures for notary documents, but still requires the physical presence of the signer with the notary. However, such physical proximity is no longer required when this law is coupled with Nebraska’s Online Notary Public Act (Neb. Rev. Stat. §§ 64-401 et. seq.), which allows the signer to be remotely located if the notary and the signer are connected simultaneously by sight and sound. The Online Notary Public Act is a recent development in Nebraska, having been passed by the unicameral in 2019 and originally set to take effect on June 30, 2020. But, in response to the Coronavirus crisis, Governor Ricketts signed an Executive Order allowing for the early implementation of the Online Notary Public Act via emergency regulations that are in effect through June 30, 2020. The end result is the easing of requirements for notarized transactions until such time as the new law takes effect.