Suppose for a moment a business acquaintance of yours sends you an email proposing a specific transaction. And let’s suppose you respond that it sounds great, let’s do it. You might be thinking you haven’t really committed to anything since you haven’t signed any contracts or agreements.

And you might be wrong.

Digital signatures have finally been officially approved by the North Carolina Court of Appeals. In a recent decision by the North Carolina Court of Appeals in Powell vs. City of Newton, http://www.aoc.state.nc.us/www/public/coa/opinions/2009/pdf/081262-1.pdf the Court enforced a settlement agreement even though no settlement agreement had actually been physically signed. As far as we know, this is the first reference to this statute by the North Carolina Court of Appeals.

The Court reached its decision in part based upon emails which were sent between counsel for the parties which reflected the settlement terms and which circulated the necessary documents. The Court held that the emails and documents which were sent between attorneys for the parties actually satisfied the signature requirement of the statute and thereby bound the parties to the settlement agreement. The Court went on to say “The parties, by their conduct, impliedly agreed to conduct themselves via electronic means, subjecting themselves to the provisions of the Uniform Electronic Transactions Act”.

This brings us a new level of convenience, and perhaps some environmental advantages, but also poses some new dangers.

How Can This Impact Your Agreements With Others?

The Uniform Electronic Transactions Act (“UETA”) does not apply to all transactions but it does apply to most. It applies only to electronic records and signatures that relate to a “transaction”, which is defined as those interactions between people relating to business, commercial, or governmental affairs. UETA has the limited objective of ensuring that electronic records and electronic signatures are the equivalents of paper records and manual signatures. Thus, you now may enter into contracts with binding terms without ever actually physically signing a document as you have in the past. Simply agreeing to the terms and conditions of the agreement and responding via email to the other parties may be enough to create a binding agreement.

Agreement to use electronic means between the parties may be derived in several ways including express assent and from the context and surrounding circumstances, including the parties’ intent. In some circumstances, the use of a business card that includes your email address may be an indication of asset to contract and bind yourself electronically.

The Court’s recent decision to uphold the UETA law is a great start in enforcing the existing law. The primary aspect to remember now is that your electronic communications, including those with smart phones, etc. may create binding agreements with those you contract with.

If you have questions concerning this area of law, we hope you will contact us.