Don't Bet the Business

Here is a question I hear quite often:  “I have a contract that requires my signature but I never really signed it. I only said I would sign it on the other side’s website, so am I liable?”

Where to start? 

There are many types of contracts that require a signed writing to be enforceable. Even if a contract is not legally required to be in writing, many, if not most, contracts are written and signed by both sides to confirm the terms of the agreement. So can you sign a contract without actually signing it? 

It’s a bit of a trick question. No, you can’t sign a contract without actually signing it, but you can “sign” a contract by means other than pulling out a ball-point pen and giving the old “John Hancock.” 

In Michigan, as I have discussed before, a valid contract requires mutual assent on all essential terms. Mutual agreement can be shown by signing a written document with a pen, pencil, marker, etc. Mutual agreement also can be shown, as to many types of contracts, by an electronic signature if the parties agree to complete the transaction by electronic means. In Michigan, this “electronic signature” practice is permitted under the Uniform Electronic Transactions Act (UETA). MCL 450.833.

The UETA applies to transactions between parties, including the signing of contracts, when each party to the contract has agreed to conduct the transaction, or sign the contract, by an “electronic means.” MCL 450.835(2). Whether the parties agreed to conduct a transaction by electronic means is determined “from the context and surrounding circumstances, including the parties' conduct.” Plainly, this is a fairly broad description. 

When the parties have agreed to contract electronically, an electronic signature is used. Such a signature can be any type of "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 a record." MCL 450.832(h).

So what constitutes signing electronically? An electronic signature will be attributable to a person or party “if it is the act of the person,” and such an act can be shown in some way. For example, signing a computer screen with an electronic wand plainly will be enough. Saying “yes” over the telephone can be sufficient assent to form a contract. Similarly, clicking a button imposed on an electronic copy of a contract on a website likely will be deemed sufficient evidence of intent to sign a contract under MCL 450.832(h). Other examples are now commonly found and used every day as we move more and more to a paperless society.

Indeed, the UETA makes clear that if a law requires a record to be in writing an electron record satisfies the law. If the law requires a document to be signed to be enforceable, an electronic signature will suffice. MCL 450.837.

So what does all this mean? Be careful. Signing a contract documented on paper brings with it a degree of seriousness that typically is meant to impress upon both sides the binding nature of the obligations being undertaken.  That is why the law requires that some contracts be written and signed to be enforceable. 

It is also why careful lawyers want all contracts to be written and signed. While the UETA is more detailed and includes many more rules and requirements than can be fully explained in this brief discussion, the takeaway is to be very careful when dealing with any electronic transaction. 

When asked to agree to anything electronically, know what you are doing.  If you are not sure, don’t do it! That’s what lawyers are for.