Clicks and contracts

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If you believe that sending an e-mail message agreeing to a purchase doesn’t carry the same weight as your signature on a contract, think again.

Changes last year in the Uniform Commercial Code mean that a simple click of the mouse can commit you to a contract that not long ago would have required a handwritten signature.

The changes, which broadly define what constitutes a signature, came as the law attempted to bring itself into alignment with the vast changes the Internet and other communications technology have brought to business. The capability to authorize a purchase or financing agreements by simply clicking on an icon or acknowledging agreement to a contract by e-mail has speeded transactions that would otherwise have required a physical exchange of documents.

It’s also created confusion.

“The law has been trying to catch up with the technology,” says Elliott Schuchardt, a lawyer in the corporate department of law firm Rothman Gordon Foreman & Groudine.

Schuchardt says the law now broadly defines a digital or electronic signature as any kind of action in directing consent to an agreement. The law, he says, was written to include existing technologies as well as those that have yet to be created.

So it’s conceivable that an e-mail correspondence that you consider casual might be construed as being as binding as your signature on a contract.

While he acknowledges some people won’t realize the implications of their actions, Schuchardt says the advantages of using electronic signatures far outweigh the potential downside. A requirement in gaining a security interest against personal property of a debtor, for instance, is a statement by the debtor granting such interest.

The creditor is required to file a notice with a government office to enforce its rights against other creditors who may have a lien on the same collateral. Under the new law, the financing statement doesn’t require a physical signature by the debtor, so creditors can file and search the financing statements through the Internet.

One thing that hasn’t changed, however, is the wisdom of seeking legal counsel when agreements are large or complex.

Says Schuchardt: “If they’re entering into a sophisticated or large enough enough contract, they should probably have a lawyer take a look at it.” How to reach: www.rothmangordon.com