Is our contract unenforceable because it was signed electronically?
No. Under Virginia's Uniform Electronic Transactions Act, "(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, or provides for certain consequences in the absence of a signature, an electronic signature satisfies the law" (Va. Code § 59.1-485). What has to be there is the intent: an "electronic signature" is "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record" (§ 59.1-480), so electronic form answers the formal objection and nothing more. It does not supply the intent to sign. Two limits sit in front of that. The Act "applies only to transactions between parties each of which has agreed to conduct transactions by electronic means", determined "from the context and surrounding circumstances, including the parties' conduct" (§ 59.1-483(b)). And it "does not apply to a transaction to the extent it is governed by" a law governing the creation and execution of wills, codicils or testamentary trusts, or by "Title 8.1A except § 8.1A-306, Title 8.3A, Title 8.4, Title 8.4A, Title 8.5A, Title 8.7, Title 8.8A, Title 8.9A, Title 8.10, and Title 8.11" (§ 59.1-481(b)). Read the list rather than the summary: Title 8.2 (sales of goods) and Title 8.2A (leases of goods) are NOT on it, so a sale or lease of goods is inside the Act, while negotiable instruments, bank deposits, funds transfers, letters of credit, documents of title, investment securities and secured transactions are outside it. And a party that has agreed to deal electronically once "may refuse to conduct other transactions by electronic means", a right that "may not be waived by agreement" (§ 59.1-483(c)).
The trap
Virginia's § 59.1-483(b) does not stop at the consent rule, and the sentences it adds are aimed straight at boilerplate: "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 electronically may not be contained in a standard form contract unless that term is conspicuously displayed and separately consented to. An agreement to conduct a transaction electronically may not be inferred solely from the fact that a party has used electronic means to pay an account or register a purchase warranty." The subsection ends "This subsection may not be varied by agreement", so a clause purporting to supply the consent cannot cure its own defect. The scope exclusion is the other surprise, and it is narrower than it reads: § 59.1-481(b)(2) excludes ten UCC titles by number and Title 8.2 is not one of them, so a sale of goods IS governed by this Act and the electronic-form answer for a supply contract comes from § 59.1-485, not from the UCC. What is outside are the payment, banking, securities and secured-transaction titles (a promissory note or a security agreement gets no help here to the extent the excluded title governs it), and only to that extent, because § 59.1-481(c) keeps the chapter applicable to an otherwise excluded record or signature "to the extent it is governed by law other than those specified in subsection (b)", and § 59.1-481(d) adds that a transaction inside the chapter "is also subject to other applicable substantive law". (No Virginia UCC text was available for review, so nothing in this rule states what those excluded titles themselves provide.)
5 authorities
- statuteVa. Code § 59.1-485enactment 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, or provides for certain consequences in the absence of a signature, an electronic signature satisfies the law.
- statuteVa. Code § 59.1-483enactment 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. 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 electronically may not be contained in a standard form contract unless that term is conspicuously displayed and separately consented to. An agreement to conduct a transaction electronically may not be inferred solely from the fact that a party has used electronic means to pay an account or register a purchase warranty. This subsection may not be varied by agreement.
- statuteVa. Code § 59.1-481enactment date not established
The words that state the rule
This chapter does not apply to a transaction to the extent it is governed by: (1) A law governing the creation and execution of wills, codicils, or testamentary trusts; and (2) Title 8.1A except § 8.1A-306 , Title 8.3A, Title 8.4, Title 8.4A, Title 8.5A, Title 8.7, Title 8.8A, Title 8.9A, Title 8.10, and Title 8.11. (c) This chapter applies to an electronic record or electronic signature otherwise excluded from the application of this chapter under subsection (b) to the extent it is governed by law other than those specified in subsection (b). (d) A transaction subject to this chapter is also subject to other applicable substantive law.
- statuteVa. Code § 59.1-483enactment 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. The right granted by this subsection may not be waived by agreement.
- statuteVa. Code § 59.1-480enactment date not established
The words that state the rule
"Electronic signature" means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.