Tips for Handling Complicated E-Contracting, E-Signatures and E-Mail Issues (with real world examples)


Tips for Handling Complicated E-Contracting, E-Signatures and E-Mail Issues (with real world examples)

Posted by M. Scott Yeager 06/24/2017 from the National Business Institute Seminar- Advanced Business Contracts:  Secrets Only the Top Attorney’s Know… held in Birmingham, Alabama on June 13, 2017.


An E-contract is any kind of contract formed (1) in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail; (2) the interaction of an individual with an electronic agent, such as a computer program; or (3) the interaction of at least two electronic agents that are programmed to recognize the existence of a contract.

An E-contract is simply an agreement created and “signed” in electronic form.  These contracts or agreements can be in the form of email, where a party emails a business associate a contract and the business associate emails it back with an electronic signature indicating acceptance.  Or, an E-contract can be a “click to agree” contract, like those used for downloading software.


Just about any agreement can be drafted and executed electronically these days.  There are, however, certain agreements which must be on paper such as wills, codicils and testamentary trusts.  We can cover more on this topic later in the discussion.

In the mid to late 1990’s as e-commerce began to increase as a mainstream medium for traditional business transactions, a growing need to govern and to adopt basic business principles surrounding e-commerce arose.  Between 1996-1999, the Uniform Computer Information Transactions Act (“UCITA”) was developed by the National Conference of Commissioners on Uniform State Laws. This act was developed as a uniform commercial code for software licenses and other computer information transactions. However, this Act was not widely accepted for a number of reasons and was only adopted by Maryland (2000) and Virginia (2001).


     Subsequent to UCITA, in 1999, the Uniform Electronic Transactions Act (“UETA”) was passed and in 2000, the Electronic Signatures in Global and National Commerce Act (“E-Sign”) was passed. These Acts led to validation and enforceability of electronic signatures.  Unlike UCITA, some form of UETA and the E-Sign Act has been adopted by all 50 states.  More on E-Sign Act will be covered in the following section.

Alabama has enacted a form of UETA which has been codified at Alabama Code §§8-1A-1 et seq.  As mentioned earlier most any agreement can be formed as an electronic contract, however, the UETA does not apply to transactions governed by:

                    (1) A law governing the creation and execution of wills, codicils, or testamentary trusts.

                   (2) Title 7, the Uniform Commercial Code, other than Sections 7-1-107 and 7-1-206, Article 2,  and Article 2A.

                   (3) A statute, regulation, or other rule of law governing adoption, divorce, or other matters of  family law. OR

                   (c) This chapter does not apply to any of the following:

                  (1) Court orders or notices, or official court documents, including briefs, pleadings, and other writings, required to be executed in connection with court proceedings. OR

                 (2) Any notice of any of the following:

                  a. The cancellation or termination of utility services, including water, heat, and power.

                  b. Default, acceleration, repossession, foreclosure, or eviction, or the right to cure, under a credit agreement secured by, or a rental agreement for, a primary residence of an individual.

                  c. The cancellation or termination of health insurance or benefits or life insurance benefits, excluding annuities.


                  d. Recall of a product, or material failure of a product, that risks endangering health or safety.

                 (3) Any document required to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials.
     So, certain contracts are not covered by UETA; what is? §8-1A-5(b) of the Code of Alabama states, “this chapter applies only to transactions between parties each of which has agreed to conduct transactions by electronic means.”

Agreements can be express or can even be implied from the context and surrounding circumstances including the conduct of the parties.  If two parties have transacted business previously using electronic contracts it will be difficult to later argue an E-contract is not valid and binding.

However, §8-1A-5(c) provides that, “A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means.” This right cannot be waived by agreement.

Whether an electronic record or electronic signature has legal consequences is determined by Alabama’s UETA but other, general, law also applies. You still need to meet general contract formation (Offer, Acceptance, Consideration) laws to have an electronic contract. For example, in an exchange of multiple email intended to be a contract you still need to have intent to contract and a meeting of the minds. You cannot escape the “battle of the forms” even in the E-contract arena.

Factors to consider in determining the validity of E-contracts are:

  • Intent to sign
  • Association of the signature with the record
  • Attribution of signature to person
  • Record Retention
     We will discuss E-signatures in greater detail later in the discussion. §8-1A-8 of the Code of Alabama provides, “if parties have agreed to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver information in writing to another person, the requirement is satisfied if the information is provided, sent, or delivered, as the case may be, in an electronic record capable of retention by the recipient at the time of receipt.”  The parties need to have a meeting of the minds, not only regarding the subject of the agreement, but also for whether the agreement can be formed as an electronic contract.  Aside from any defense to contract which may arise relating to the E-signature, it is in these situations regarding formation where we can find the biggest need to protect our clients.  Let’s use as a scenario the previous example of an email agreement.  Business Party A drafts an email and sends it to Business Party B.  For this scenario let’s assume all contracting requirements have been met, and both parties are Alabama entities. The email contains terms of an agreement to conduct business such as price, quantity and a description of goods.  Business Party B sends a reply to Business Party A affirming their intent and concurrence with the terms included in the email.  Now, let’s say Business Party A intended throughout this exchange for the email to constitute the agreement and believes, in good faith, that the parties have formed a contract based on the email concurrence from Business Party B. However, Business Party B has believed the entire time that these exchanges were negotiations and the parties would memorialize the agreement on paper and sign a paper agreement.  Now, Business Party A believing they have formed an agreement ships goods to Business Party B.  Business Party B, not having sufficient need for the product at that time, contacts Business Party A and rejects the shipment stating they did not have a contract.  Do they have a contract?

First, we look to Alabama Code §8-1A-7, Legal recognition of electronic records, electronic signatures and electronic contracts which states, “(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.” Business Party B probably loses this argument.  Next, we look at subsection B which states, “(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation”; and subsections C and D which state, “(c) If a law requires a record to be in writing, an electronic record satisfies the law, and (d) If a law requires a signature, an electronic signature satisfies the law.”


Does Business Party B have an argument?  Of course, anyone can argue any point.  Does Business Party B have a good argument? Maybe not.


     Let’s look further into to Alabama Code §8-1A-6, Construction and application. “This chapter shall be construed and applied in each of the following manners: (1) To facilitate electronic transactions consistent with other applicable law, and (2) To be consistent with reasonable practices concerning electronic transactions and with the continued expansion of those practices, and (3) To effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it.” The basis for Alabama’s UETA is to facilitate laws relating to electronic contracting to be consistent with other laws, not to supersede them.  As such, Business Party B can argue even if there was a meeting of the mind regarding the terms, there was no meeting of the mind regarding consummation of the transaction by electronic contract.  Unless the parties agreed that their communications were considered to be a contract it is likely in this scenario that no agreement was formed through the exchange of email between Business Party A and Business Party B. 


E-signatures and acceptance of E-contracts is one of the most common defenses used in arguing an E-contract was not formed.  As we previously discussed, Alabama Code §8-1A-7(d) states, “If a law requires a signature, an electronic signature satisfies the law.”

So, what is an electronic signature?  An electronic signature is commonly defined as an electronic sound, symbol, or process attached to or associated with a record that someone executes or adopts with the intent to sign the record. An electronic signature can consist of (1) typing the signor’s name into a signature area, (2) pasting in a scanned version of the signor’s signature, (3) clicking an “I Accept” button, or (4) using cryptographic “scrambling” technology such as a Public Key Infrastructure (PKI).  At its simplest level, an electronic signature must be unique and verifiable so that it can provide the authentication and non-repudiation benefits of a handwritten signature.

     Many businesses today operate all or a portion of their business through e-commerce means. This makes e-signature validation all the more important, and many times places a burden on a business to have verifiable processes and procedures to assure the consumer is who they say they are, actually signed the agreement with intent to be bound, and understood the terms as presented to them. 

As previously noted, factors to consider in determining the validity of E-contracts are:

1)  Intent to sign

2)  Association of the signature with the record

3)  Attribution of signature to person

4)  Record Retention

Not only does a business need to understand e-signature and e-contracting for their consumers, they need to understand the effect e-signatures have with regard to communication and acceptance of policies and procedure with their employees.  Let’s say a company has a history of communicating policies and procedures with their employees via email.  So, Company A desires to implement a new mandatory arbitration provision and emails same to its thousands of employees.  In 2005, the U.S. Court of Appeals for the First Circuit, held in Campbell v. General Dynamics Government Systems Corp. 407 F.3d 546 (1st Cir. 2005), that a mass email to all of its employees was not sufficient to establish a contract with the employee. The Court stated that a straightforward email expressly describing a new, mandatory arbitration provision could form a valid arbitration agreement, especially if the company had a history of announcing policies via company-wide email or if it had required the employee to click a box or send a response.  In this instance, the company did not regularly handle personnel matters via email, and did not require a response from the employee. This decision clearly demonstrated the importance and the need for procedures and controls for employers when communicating any information intended to bind employees.

     In another case from 2012, Buckhalter v. J.C. Penny Corp., No. 3:11-CV-752-CWR-FKB, 2012 WL 4468455 (S.D. Miss. 2012), the Federal Court in the Southern District of Mississippi found that an electronic signature on an arbitration agreement was binding even though the plaintiff claimed the signature was not his. The court found in favor of the employer because of the extensive “onboarding” process it maintained for new hires.  Each employee was assigned a unique identification number, and then required to create a password that no one, not even the system administrator, knew.  The employee was then required to log back into the system using the newly created password to complete the onboarding process.  This included electronically signing the arbitration agreement.  The employee then had to complete a form with their supervisor which further evidenced agreement.

As you can see the more likely an employer can prove, Intent, Association and Attribution, the more likely the employer can demonstrate the employee is bound by provisions provided via an electronic format.  For those of us with corporate clients it is imperative to make sure they have these policies and procedures in place and in writing.

When dealing with consumers via an electronic medium it is equally important to have procedures and policies to assure validation of e-signatures.  In this modern era of immigration, regardless of your political position, in most every instance a company is required to validate citizenship. Additionally, with modern day hacking and identity theft, it is incumbent upon a business providing e-commerce to protect the personal information of their customer.  This goes for any kind of information falling under HIPPA as well.

This issue has been addressed by the Alabama Court of Civil Appeals in Jimmy L. Johnson, Jr. v. First Acceptance Insurance Company, Inc., 2150629 Ala. Civ. App. 2017). This matter came before the Appellate Court on appeal from Lowndes Circuit Court.  The materials submitted to the trial court indicate the following pertinent facts. On October 18, 2013, Johnson was involved in a motor-vehicle accident caused by an underinsured driver. Johnson had a policy of automobile insurance with First Acceptance, and he sought to recover UIM benefits under that policy. First Acceptance denied Johnson’s claim, asserting that Johnson had declined UIM coverage.

     Alabama Code §32-7-23(a) governs uninsured-motorist coverage and has been interpreted as requiring an applicant reject UIM coverage in writing. First Acceptance moved for summary judgment contending that Johnson signed the application for insurance electronically and that his signature declining UIM coverage is his electronic signature. Plaintiff submitted affidavit testimony opposing the Motion for Summary Judgment stating that he never signed the electronic document. Despite Plaintiff’s affidavit, the trial court granted First Acceptance’s Motion for Summary Judgment.  On appeal, the Alabama Court of Civil Appeals found that a material issue of fact existed, i.e. whether Johnson electronically signed the portion of the application waiving UIM coverage.  As such, the Court held that the trial court erred in entering a summary judgment in favor of First Acceptance. 

The appellant attempted to make an argument that UETA was in conflict with §32-7-23 and case law interpreting §32-7-23(a). However, the Appellate Court, in the ruling, noted “he does not develop any argument that a requirement of a signature cannot be satisfied by an electronic signature under §8-1A-7.” Therefore, “We decline to address an issue of first impression in the absence of a properly developed argument from an interested appellant.”


This is an important case with regard to process and procedures for businesses utilizing e-signatures as this case does address how a business can associate and attribute an e-signature to a specific individual.


First Acceptance noted that they had a process and procedure by which applicants for insurance coverage could e-sign.  As part of this process First Acceptance argued because the applicant used a different font when typing his name, he thereby was indicating his acknowledgment and intent to sign.  First Acceptance attributed the signature to Mr. Johnson solely on the fact that Mr. Johnson also went to the office of an agent to complete the application.


This case left us with many questions so we are left with the same position we were in before.  It is vitally important for anyone using e-signatures to have the ability and process in place to verify the following:

1)  Intent to sign

2)  Association of the signature with the record

3)  Attribution of signature to person

4)  Record Retention


We previously touched on an issue with regard to e-mail between businesses and whether those communications create a contract.  As we have learned the parties must have intent to form an E-contract, and that is a difficult burden to prove without a written acknowledgement and/or acceptance; or previous conduct of the parties.

With regard to email a business, whether dealing with another business or a consumer has a burden to prove the email was (1) received, (2) by the intended party, and (3) that party has an understanding of the basis of the email.

In Moore v. Dennis-Franklin, 201 So.3d 1131 (Ala. 2016), the Alabama Supreme Court upheld the ruling of the Mobile Circuit Court denying a motion to compel arbitration. The appellee had three bank accounts with the predecessor bank to the appellant bank before it merged with the appellant bank. Shortly before the merger, the appellate bank, in January 2012, allegedly mailed a welcome letter and an account agreement to the appellee at his home in Mobile. After the two banks merged, the appellee’s accounts were converted to the appellant bank accounts on March 2, 2012.

The account agreement did not contain an arbitration provision. On January 20, 2013, the appellee’s niece, who lived in Atlanta, came to Mobile to visit the appellee. It appeared to the appellee and the niece that the appellant had created an online banking profile for the appellee but had set up the profile so that account notifications were sent to her e-mail address.

The appellee, who was elderly, did not have Internet access or an e-mail address and did not know how to use online banking. After investigating the matter, the appellee and niece came to the conclusion that the appellant had been stealing funds from the appellee’s accounts. On February 13, 2013, the appellee and niece met with, a branch manager for the appellant bank, about their concerns.

     The appellee sued the appellant bank and the appellant on November 27, 2013, alleging fraud, suppression, breach of fiduciary duty, and various forms of negligence and wantonness. The appellant bank moved to compel arbitration, which the appellant joined. The trial court denied the motion to compel arbitration. The Supreme Court noted that the appellant and the appellant bank failed to prove that the niece or the appellee accessed either the specific Web page on which the arbitration provision was located or a specific e-mail containing the arbitration provision itself. Thus, the appellee did not receive proper notice of the amendment to the account agreement and was not bound by it. Therefore, the motion to compel arbitration was properly denied. Accordingly, the order of the trial court was affirmed.

When conducting business, any business, via email it is imperative to prove the intended recipient actually received the email, viewed the email and understands its contents. The key is to have a process and procedure in place which, with the highest degree of certainty possible, can validate the required assurances as if the intended recipient was signing a paper document in person, in your presence.


E-commerce is an ever-growing necessity for survival in any industry these days.  Whether we are representing business clients or consumer clients it is imperative to follow the simple steps we would follow for any contractual relationship.  At its basics if we cannot validate intent and a meeting of the minds it is likely we do not have a contract. If we are conducting business via email or other electronic avenues we must be able to conclusively know the intended recipient (1) received the communication, (2) read the communication, and (3) understands or has the capacity to understand the contents of the communication.

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