Is the contract our Iowa counterparty signed electronically enforceable?
Within chapter 554D's scope, yes, and no further. Except as its exclusions provide, the chapter "applies to electronic records and electronic signatures relating to a transaction" (Iowa Code § 554D.104(1)), and "A transaction subject to this chapter is also subject to other applicable substantive law" (§ 554D.104(3)), so the chapter answers an objection to the FORM of the record or signature and leaves every other objection to the contract exactly where it was. A record or signature shall not be denied legal effect or enforceability solely because it is in electronic form, and a contract shall not be denied legal effect or enforceability solely because an electronic record was used in its formation; if a law requires a record to be in writing, an electronic record satisfies the law, and if a law requires a signature, an electronic signature satisfies the law (Iowa Code § 554D.108). The chapter applies only to transactions between parties each of which has agreed to conduct transactions by electronic means, and whether the parties so agreed is determined from the context and surrounding circumstances, including the parties' conduct (§ 554D.106(2)).
The trap
The scope section is where an electronic signature argument usually fails, and § 554D.104(3) is where it stops being an argument at all: electronic form is not a defence, but neither is it a cure. A record that would fail for want of consideration, authority, capacity or a statutory formality other than writing and signature fails just the same in electronic form. Chapter 554D does not apply to a transaction to the extent it is governed by a law governing the creation or execution of wills, codicils or testamentary trusts, or by chapter 554 (the Iowa UCC) other than articles 2 and 13 and § 554.1306 (§ 554D.104(2)). So a sale of goods or a lease is inside the chapter, while a record governed by the UCC's other articles is outside it to that extent. Consent is the other threshold: without agreement by each party to transact electronically, shown from context and conduct, the chapter does not reach the transaction at all, and § 554D.106(3) makes the right to refuse to conduct OTHER transactions electronically non-waivable by agreement. Two further limits sit in § 554D.106. The chapter "does not require a record or signature to be created, generated, sent, communicated, received, stored, or otherwise processed or used by electronic means or in electronic form" (subsection 1), so it never forces a counterparty onto an electronic channel. And subsection 4 makes most of the chapter default rather than mandatory: "Except as otherwise provided in this chapter, the effect of any of its provisions may be varied by agreement." So the agreement can rewrite much of what the chapter supplies, and the one thing it cannot touch is the § 554D.106(3) right to refuse OTHER transactions.
11 authorities
- statuteIowa Code § 554D.108enactment date not established
The words that state the rule
A record or signature shall not be denied legal effect or enforceability solely because it is in electronic form.
- statuteIowa Code § 554D.108enactment date not established
The words that state the rule
If a law requires a record to be in writing, an electronic record satisfies the law.
- statuteIowa Code § 554D.104enactment date not established
The words that state the rule
Except as provided in subsection 2, this chapter applies to electronic records and electronic signatures relating to a transaction.
- statuteIowa Code § 554D.104enactment date not established
The words that state the rule
This chapter does not apply to a transaction to the extent it is governed by any of the following: a. A law governing the creation or execution of wills, codicils, or testamentary trusts. b. Chapter 554 other than chapter 554, articles 2 and 13, and section 554.1306.
- statuteIowa Code § 554D.106enactment date not established
The words that state the rule
This chapter applies only to transactions between parties each of which has agreed to conduct transactions 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.
- statuteIowa Code § 554D.106enactment date not established
The words that state the rule
A party who agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. The right granted by this subsection may not be waived by agreement.
- statuteIowa Code § 554D.108enactment date not established
The words that state the rule
A contract shall not be denied legal effect or enforceability solely because an electronic record was used in its formation.
- statuteIowa Code § 554D.108enactment date not established
The words that state the rule
If a law requires a signature, an electronic signature satisfies the law.
- statuteIowa Code § 554D.104enactment date not established
The words that state the rule
A transaction subject to this chapter is also subject to other applicable substantive law.
- statuteIowa Code § 554D.106enactment date not established
The words that state the rule
This chapter does not require a record or signature to be created, generated, sent, communicated, received, stored, or otherwise processed or used by electronic means or in electronic form.
- statuteIowa Code § 554D.106enactment date not established
The words that state the rule
Except as otherwise provided in this chapter, the effect of any of its provisions may be varied by agreement. The presence in certain provisions of this chapter 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.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.