Are Online Business Transactions Executed by Electronic Signatures Legally Binding?

By: Carl Carl, Corey Ciocchetti, Wes Barton & Nathan Christensen

Most of us believe that we make contracts over the Internet all the time. We buy books and computers, arrange for hotels and planes, trade stocks, and apply for mortgages. But as recently as seven months ago that transaction was most likely not legally binding. This uncertainty led many practitioners, businesspeople, and consumers to question the efficacy of contracts executed by electronic signatures. Without a uniform standard, many jurisdictions ruled inconsistently, while other jurisdictions did not consider the issue. This disparate treatment threatened the legitimacy of online agreements and deprived both consumers and businesses of the certainty and predictability expected from well-developed markets. The law’s formalities evolved outside of the digital world, and the process of adapting them to it has proven to be more difficult than expected. In June of 2000, Congress attempted to solve this problem with the Electronic Signatures in Global and National Commerce Act (E-Sign).

Cite: 2001 Duke L. & Tech. Rev. 0005

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