Is this contract unenforceable because it was signed electronically, and is the click-through agreement to transact electronically good enough?
Electronic form is not a defence: a record or signature may not be denied legal effect or enforceability solely because it is in electronic form, a contract may not be denied effect solely because an electronic record was used in its formation, an electronic record satisfies a law requiring a writing, and an electronic signature satisfies a law requiring a signature (Civ. Code § 1633.7). Both rules operate only where the title applies at all: § 1633.3(b)-(c) excludes transactions subject to a law governing the creation and execution of wills, codicils or testamentary trusts; to Division 1 of the Uniform Commercial Code (except Sections 1206 and 1306) and Divisions 3, 4, 5, 8, 9 and 11; to a law requiring specifically identifiable text or disclosures to be separately signed (with the exceptions stated there); and to a long list of specifically enumerated transactions. And California's UETA applies ONLY to a transaction between parties each of which has agreed to conduct the transaction by electronic means, and § 1633.5(b) constrains how that agreement may be obtained: except for a separate and optional agreement whose primary purpose is to authorise electronic transacting, the agreement may not be contained in a standard form contract that is not an electronic record, may not be conditioned on agreeing to transact electronically, and may not be inferred solely from the fact that a party used electronic means to pay an account or register a purchase or warranty. That subdivision may not be varied by agreement. Two more things the title fixes. A party that has agreed to transact electronically "may refuse to conduct other transactions by electronic means", and a buyer who bought electronically from a seller that sells both ways may refuse further electronic dealings on those goods or services; that subdivision too may not be varied by agreement (§ 1633.5(c)). And an exclusion under § 1633.3(b) or (c) only takes the transaction out of this title; it does not prohibit conducting it electronically where other law allows (§ 1633.3(f)). Attribution is a separate question: an electronic record or signature is attributable to a person if it was the act of the person, shown in any manner including the efficacy of a security procedure (§ 1633.9(a)).
The trap
A consent-to-electronic-records clause buried in a paper standard form does not count, consent cannot be made a condition of the deal, and the customer's use of an electronic payment is not by itself consent (it 'may not be inferred solely from' that fact), and that much cannot be contracted around, because § 1633.5(b) closes with 'This subdivision may not be varied by agreement.' The rest of the title is the other way round: except as otherwise provided in it, 'the effect of any of its provisions may be varied by agreement' (§ 1633.5(d)), so it is subdivisions (b) and (c), not the whole title, that are beyond the reach of a drafter. Where those conditions are not met, or the transaction is on § 1633.3's exclusion lists, the title does not apply to it, and the signature question falls back on other law. The separate-signature exclusion has an exception inside it, and the double negative is the trap. § 1633.3(b)(4) puts outside the title “A law that requires that specifically identifiable text or disclosures in a record or a portion of a record be separately signed, including initialed, from the record. However, this paragraph does not apply to Section 1677 or 1678 of this code or Section 1298 of the Code of Civil Procedure.” So a law demanding separately initialled text generally takes the transaction out of California's electronic-transactions title, but NOT the liquidated-damages provisions for real property purchase contracts in Civ. Code §§ 1677 and 1678, nor the real-estate arbitration provision in Code Civ. Proc. § 1298. Those three stay inside the title and can be signed electronically even though §§ 1677 and 1678 require the liquidated-damages provision to be separately signed or initialed by each party to the contract, and § 1298 prescribes an initialled assent immediately below the arbitration provision.
13 authorities
- statuteCal. Civ. Code § 1633.7enactment date not established
The words that state the rule
(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form. (b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation. (c) If a law requires a record to be in writing, an electronic record satisfies the law. (d) If a law requires a signature, an electronic signature satisfies the law.
- statuteCal. Civ. Code § 1633.5enactment date not established
The words that state the rule
(b) This title applies only to a transaction between parties each of which has agreed to conduct the transaction by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct. Except for a separate and optional agreement the primary purpose of which is to authorize a transaction to be conducted by electronic means, an agreement to conduct a transaction by electronic means may not be contained in a standard form contract that is not an electronic record. An agreement in such a standard form contract may not be conditioned upon an agreement to conduct transactions by electronic means. An agreement to conduct a transaction by electronic means may not be inferred solely from the fact that a party has used electronic means to pay an account or register a purchase or warranty. This subdivision may not be varied by agreement.
- statuteCal. Civ. Code § 1633.3enactment date not established
The words that state the rule
(a) Except as otherwise provided in subdivisions (b) and (c), this title applies to electronic records and electronic signatures relating to a transaction. (b) This title does not apply to transactions subject to any of the following laws: (1) A law governing the creation and execution of wills, codicils, or testamentary trusts. (2) Division 1 (commencing with Section 1101) of the Uniform Commercial Code, except Sections 1206 and 1306. (3) Divisions 3 (commencing with Section 3101), 4 (commencing with Section 4101), 5 (commencing with Section 5101), 8 (commencing with Section 8101), 9 (commencing with Section 9101), and 11 (commencing with Section 11101) of the Uniform Commercial Code. (4) A law that requires that specifically identifiable text or disclosures in a record or a portion of a record be separately signed, including initialed, from the record. However, this paragraph does not apply to Section 1677 or 1678 of this code or Section 1298 of the Code of Civil Procedure.
- statuteCal. Civ. Code § 1633.5enactment date not established
The words that state the rule
(c) A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. If a seller sells goods or services by both electronic and nonelectronic means and a buyer purchases the goods or services by conducting the transaction by electronic means, the buyer may refuse to conduct further transactions regarding the goods or services by electronic means. This subdivision may not be varied by agreement.
- statuteCal. Civ. Code § 1633.3enactment date not established
The words that state the rule
(d) This title applies to an electronic record or electronic signature otherwise excluded from the application of this title under subdivision (b) when used for a transaction subject to a law other than those specified in subdivision (b). (e) A transaction subject to this title is also subject to other applicable substantive law. (f) The exclusion of a transaction from the application of this title under subdivision (b) or (c) shall be construed only to exclude the transaction from the application of this title, but shall not be construed to prohibit the transaction from being conducted by electronic means if the transaction may be conducted by electronic means under any other applicable law. (g) Notwithstanding subdivisions (b) and (c), this title shall apply to electronic records and electronic signatures relating to transactions conducted by a person licensed, certified, or registered pursuant to the Alarm Company Act (Chapter 11.6 (commencing with Section 7590) of Division 3 of the Business and Professions Code) for purposes of activities authorized by Section 7599.54 of the Business and Professions Code.
- statuteCal. Civ. Code § 1633.9enactment date not established
The words that state the rule
(a) An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable. (b) The effect of an electronic record or electronic signature attributed to a person under subdivision (a) is determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties’ agreement, if any, and otherwise as provided by law.
- statuteCal. Civ. Code § 1633.3enactment date not established
The words that state the rule
(c) This title does not apply to any specific transaction described in Section 17511.5 of the Business and Professions Code, Section 798.14, 1133, or 1134 of, Section 1689.6, 1689.7, or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14, 1789.16, or 1793.23 of, Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5, 1917.712, 1917.713, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i, 2924j, 2924.3, or 2937 of, Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3 of, Section 2954.5 or 2963 of, Chapter 2b (commencing with Section 2981) or 2d (commencing with Section 2985.7) of Title 14 of Part 4 of Division 3 of, Section 3071.5 of, Part 5 (commencing with Section 4000) of Division 4 of, or Part 5.3 (commencing with Section 6500) of Division 4 of, this code, subdivision (b) of Section 18608 or Section 22328 of the Financial Code, Section 1358.15, 1365, 1368.01, 1368.1, 1371, or 18035.5 of the Health and Safety Code, Section 786 as it applies to individual and group disability policies, 10199.44, 10199.46, 10235.16, 10235.40, 11624.09, or 11624.1 of the Insurance Code, Section 779.1, 10010.1, or 16482 of the Public Utilities Code, or Section 9975 or 11738 of the Vehicle Code. An electronic record may not be substituted for any notice that is required to be sent pursuant to Section 1162 of the Code of Civil Procedure. This subdivision does not prohibit the recordation of any document with a county recorder by electronic means.
- statuteCal. Civ. Code § 1633.2enactment date not established
The words that state the rule
(h) “Electronic signature” means 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 electronic record. For purposes of this title, a “digital signature” as defined in subdivision (d) of Section 16.5 of the Government Code is a type of electronic signature.
- statuteCal. Civ. Code § 1633.4enactment date not established
The words that state the rule
This title applies to any electronic record or electronic signature created, generated, sent, communicated, received, or stored on or after January 1, 2000.
- statuteCal. Civ. Code § 1633.5enactment date not established
The words that state the rule
(d) Except as otherwise provided in this title, the effect of any of its provisions may be varied by agreement. The presence in certain provisions of this title of the words “unless otherwise agreed,” or words of similar import, does not imply that the effect of other provisions may not be varied by agreement.
- statuteCal. Civ. Code § 1677enactment date not established
The words that state the rule
A provision in a contract to purchase and sell real property liquidating the damages to the seller if the buyer fails to complete the purchase of the property is invalid unless: (a) The provision is separately signed or initialed by each party to the contract; and (b) If the provision is included in a printed contract, it is set out either in at least 10-point bold type or in contrasting red print in at least eight-point bold type.
- statuteCal. Civ. Code § 1678enactment date not established
The words that state the rule
If more than one payment made by the buyer is to constitute liquidated damages under Section 1675, the amount of any payment after the first payment is valid as liquidated damages only if (1) the total of all such payments satisfies the requirements of Section 1675 and (2) a separate liquidated damages provision satisfying the requirements of Section 1677 is separately signed or initialed by each party to the contract for each such subsequent payment.
- statuteCal. Civ. Proc. Code § 1298enactment date not established
The words that state the rule
(c) Immediately before the line or space provided for the parties to indicate their assent or nonassent to the arbitration provision described in subdivision (a) or (b), and immediately following that arbitration provision, the following shall appear: “NOTICE: BY INITIALLING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ‛ARBITRATION OF DISPUTES’ PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE ‛ARBITRATION OF DISPUTES’ PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.” “WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE ‛ARBITRATION OF DISPUTES’ PROVISION TO NEUTRAL ARBITRATION.” If the above provision is included in a printed contract, it shall be set out either in at least 10-point bold type or in contrasting red print in at least 8-point bold type, and if the provision is included in a typed contract, it shall be set out in capital letters.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.