COVID-19: Frequently asked questions on e-signing in the U.S.

UPDATED: This article was updated on April 23, 2020. 

Remote working arrangements have been widely implemented in organizations around the world. In this series of FAQs, we consider the implications of remote working with a focus on the execution of New York law contracts and related filings and the practical solutions available.

What law governs electronic signatures in the U.S.?

On a federal level, the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq. (E-SIGN) provides for the validity and effectiveness of electronic signatures used in transactions that are in or affect interstate or foreign commerce. The vast majority of states have adopted the Uniform Electronic Transactions Act (UETA) that governs the use of electronic signatures on a state-wide level. New York is one of three states that did not adopt the UETA, but it did adopt its own form of comparable state legislation under the Electronic Signatures and Records Act, N.Y. State Tech. Law § 301 et seq. (ESRA) to facilitate the use and acceptability of electronic signatures in the state. As a general matter, all states have substantially similar rules for the use of electronic signatures as E-SIGN pre-empts state legislation whenever inconsistent for contracts that fall within its subject matter. If not otherwise expressly addressed by any of the foregoing, relevant provisions of the Uniform Commercial Code (UCC) should also be reviewed to determine whether a party may use electronic signatures with respect to documents governed by the UCC. Specific requirements related to state corporate entity law (e.g., the General Corporation Law of the State of Delaware) and contemplated filing destinations (e.g., any government office filings) should also be considered.

What are the methods for signing a New York law contract?

There is no requirement under New York law for a contract to be signed in a particular manner as long as the signature demonstrates the party’s intent to authenticate the underlying contract. Commercial contracts are typically either signed by hand or electronically. Electronic signatures carry the same weight as handwritten ones under ESRA and are increasingly used by parties to facilitate and expedite commercial contracts. 

Certain documents as set forth below are excluded from ESRA and require handwritten signatures in New York.

What is an electronic signature?

Under ESRA, an electronic signature is defined as an “electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record.” N.Y. State Tech. Law § 540.4.  ESRA does not require any specific level or method of signer identification or authentication. Parties have flexibility in selecting an appropriate type of electronic signature; they can choose to merely type their names or to utilize a more sophisticated e-system process with a password, PIN, or some other digital object to separately authenticate the signer’s identity and intent.

Does an electronic signature satisfy New York statutory requirements for a contract to be signed?

Yes. Generally under ESRA and E-SIGN, an electronic signature is a valid form of signature and satisfies legal signing requirements.  However, certain documents are excluded from ESRA and require handwritten signatures. These include wills, trusts, decisions consenting to orders not to resuscitate, powers of attorney and health care proxies. ESRA also does not cover negotiable instruments and other instruments of title where possession of the instrument confers title “unless an electronic version of such record is created, stored or transferred in a manner […] that allows for the existence of only one unique, identifiable and unalterable version which cannot be copied except in a form that can be readily identifiable as a copy.” N.Y. State Tech. Law § 307. Recording requirements for certain real estate documents may also require handwritten signatures if the local recording office has elected not to accept electronic signatures, which is permitted under ESRA.

Does an electronic signature have the same legal status as a “wet ink” signature?

Yes. Pursuant to ESRA, electronic signatures carry the same force and effect as “signature(s) affixed by hand.” N.Y. State Tech. Law § 540.4(a).

If one person is using an electronic signature, do all parties have to sign electronically?

No. Parties to a contract do not have to sign the contract the same way as both handwritten and electronic signatures would satisfy a requirement that a contract be signed, as long as the parties intended to be bound.

Can a non-U.S. company execute a New York law contract using an electronic signature?

Yes. Under ESRA, agreements executed using electronic signatures are given the same force and effect as signatures produced by non-electronic means, subject to certain exceptions (e.g., testamentary trusts, powers of attorney). Thus, non-U.S. company electronic signatures should be effective under a New York law-governed contract provided that, under the laws of the jurisdiction in which the company is incorporated, the signatory is acting under the authority (express or implied) of the company – this authority includes whether the company may be bound by electronic signature.

Can electronic signatures be used in contracts governed other than by New York law?

The effectiveness of electronic signatures in validly executing a contract governed by the laws of a jurisdiction other than New York varies among jurisdictions. As stated previously, electronic signatures can generally be used and are enforceable in commercial transactions across the United States, subject to particularities of any state’s specific laws and regulations. However, non-U.S. jurisdictions may differ. For example, subject to certain conditions, German law contracts requiring notarization (including contracts to purchase or transfer real property) do not permit the use of electronic signatures. Similar concerns may apply in other jurisdictions with notarization requirements. Consideration should also be given to the jurisdiction in which any litigation or other action in relation to a document may be required to be taken in the future.

I need to sign a document virtually but cannot access a scanner to create a PDF scan. Can I take a photograph of the relevant pages instead?

Yes. You can use a camera phone, for example, to produce an electronic image of the signed contract in the same way as you would use a scanner. The images should be clearly legible and should ideally include any document ID number. You should follow the signing instructions for the virtual signing in the same way you would if using a scanner.

I do not have access to a printer. Can I ‘sign’ a document by attaching it to an email unsigned but stating that the document is agreed to by the sender of the email?

In some cases, yes. This will be effective in the case of most contracts, though, depending on the circumstances, may not be for contracts where a signature is required by its terms or by law, such as any document providing for the disposition of property upon a person’s death (e.g., wills, trusts, powers of attorney), or any negotiable instruments and other instruments of title wherein possession of the instrument itself is deemed to confer title. Subject to the general limitations on e-signing specified above, it will be appropriate to include in the email a statement confirming that the email constitutes a signature of the attached document and intent to be bound, together with the signatory’s typed name or email signature.

As discussed above, an alternative is for the signatory to type his or her name into the soft copy contract – this can also be effective as an electronic signature.

A virtual signing will be taking place with signatories working from home, some of whom may sign electronically using DocuSign. Are any changes in practice required?

Signing instructions typically contemplate virtual signings, given their wide usage across commercial transactions for many years. Each party should be informed of the other’s intended method of execution if they should differ to prevent confusion and any subsequent challenges to due execution.  

If signatories are signing remotely, are counterparts clauses required?

No, a New York law-governed contract can be executed in counterpart, regardless of whether a counterparts clause is included.  However, it is considered best practice to include such a clause as it reduces litigation risk by reducing the likelihood that any party will try to assert that the contract is invalid. If electronic signatures are being used, it may also be helpful to add a clause within the contract itself noting that the parties agree to accept electronic signatures.

Can a spouse or family member witness a signature?

As a general matter, business contracts do not need to be witnessed or notarized in order to be legally binding under New York law.  In New York, only certain documents such as wills and marriage agreements need to be witnessed (unlike other states, New York does not require deeds or mortgages to be witnessed in order to be recorded by the state or county).  While a spouse or family member may technically serve as a witness to a New York will, provided that they are not a beneficiary, best practice is still to avoid using a witness who is related to the signatory where possible.

How may a person witness another’s electronic signature?

Typically, the witness should be physically present when the signatory signs the will or marriage agreement in New York. However, a recent New York executive order temporarily permits (currently through May 7, 2020, unless extended) remote witnessing via video conference for certain documents, including estate planning documents.

Is remote notarization of documents permissible?

Yes. Pursuant to another New York executive order (currently effective through April 18, 2020, unless extended), “any notarial act that is required under New York State law” is allowed to be performed using audio-video technology if certain requirements are met, including that the person seeking the notary’s services, if not personally known to the notary, presents valid photo ID to the notary during the video conference.

Will the U.S. Securities and Exchange Commission (the “SEC”) accept filings with electronic signatures?

SEC rules already require signatures in filings made through the EDGAR system to be submitted in typed form, but companies must retain, for five years, copies of the wet ink signature pages adopting the electronic signatures (which must be manually signed before or at the time the filing is made). The SEC staff recently issued a statement, however, saying that it will not recommend enforcement action if:

  • a signatory retains the manually signed signature page and provides it, as promptly as reasonably practicable, to the company for retention in the ordinary course;
  • the document indicates the date and time when the signature was executed; and
  • the company establishes and maintains policies and procedures governing this process (the “Signature Retention Procedures”).

The signatory may also provide the company an electronic record (such as a photograph or PDF) of the document when it is signed.

Additionally, the SEC is also providing temporary relief (from March 26, 2020 through July 1, 2020, unless extended) from the notarization required to gain access to make filings on the EDGAR system. Among other conditions, the filer must indicate on its manually signed Form ID that it could not provide the required notarization due to circumstances relating to COVID-19, and that the filer submits a PDF copy of the notarized, manually signed document within 90 days of obtaining an EDGAR account.

Additionally, the SEC is also providing temporary relief (from March 26, 2020 through July 1, 2020, unless extended) from the notarization required to gain access to make filings on the EDGAR system. Among other conditions, the filer must indicate on its manually signed Form ID that it could not provide the required notarization due to circumstances relating to COVID-19, and that the filer submits a PDF copy of the notarized, manually signed document within 90 days of obtaining an EDGAR account.

Will the SEC accept paper filings without wet ink signatures?

The SEC accepts a number of filings in paper form, including:

  • Annual reports to security holders furnished by foreign private issuers on Form 6-K;
  • Reports or other documents furnished by foreign private issuers on Form 6–K;
  • Periodic reports and distribution reports filed by certain international development banks;
  • Unabridged foreign language documents and English translations of a foreign government’s or its political subdivision’s latest annual budget; and
  • Forms 11-K (annual reports of employee stock purchase, savings and similar plans).

The SEC staff is providing temporary relief, from April 23, 2020 to June 30, 2020, that permits the above documents to be submitted via email in lieu of mailing or delivering the paper document to the SEC. The filer must attach a complete document, including any required exhibits, as PDF attachments to an email sent to CorporationFinancePaperForms@SEC.gov.

If the filer is unable to provide a manual signature on a document submitted by email, the staff will not recommend enforcement action if the filer follows the Signature Retention Procedures.