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Why Businesses Should Embrace Electronic Contracts and Signatures During Social Distancing

April 22, 2020

Due to the COVID-19 outbreak, much of Louisiana is working from home. With a drastic move toward remote working, electronic contracts and signatures are a simple solution to keep business going without unnecessary delays. 

While electronic contracts and signatures have been around for many years in Louisiana, they may not have been commonly used before the pandemic. In 2001, the state passed the Louisiana Uniform Electronic Transactions Act (UETA), which made electronic contracts and signatures legally valid. The statute provides that:

  • 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 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.
  • If a law requires a signature, an electronic signature satisfies the law.

However, this law only applies when both parties agree “to conduct transactions by electronic means.” As part of the negotiations, a party should make it clear that they intend to conduct business electronically and ask for a reciprocal acknowledgment from the other party. Once this method has been agreed to, they are free to form electronic contracts even through email. In fact, some courts have held that a person’s name typed at the end of an email constitutes a signature sufficient to bind the party under various states’ versions of the UETA.

Even if parties agree to conduct business transactions electronically, some documents are excluded from this law. The UETA states that it does not apply to certain family matters, including wills, trusts, adoptions and divorces.  It also does not apply to any notices involving the cancellation of utilities, evictions, termination of health insurance benefits, or other specialized notices.  

Despite these exemptions, most contracts that a business creates or executes can be done electronically. For instance, Louisiana allows lawyers to sign pleadings or other documents in Louisiana state courts.1 The UETA also states an electronic signature could be used for notarizing a document.  In response to COVID-19, Gov. John Bel Edwards has temporarily allowed for remote notarizations using video conferences. Like the UETA, this proclamation does not apply to certain documents, including testaments, trust instruments and marriage agreements.

During this time of social distancing, electronic contracts and signatures will be an integral part of the world economy. Louisiana residents should feel comfortable using electronic contracts and signatures to conduct their everyday business. 

Please contact Matthew Slaughter or Phelps’ Litigation team if you have any questions or need compliance advice and guidance. For more information related to COVID-19, please also see Phelps’ COVID-19: Client Resource Portal.

 

[1] La.C.C.P. art 253(E) states “[t]he clerk shall not refuse to accept for filing any pleading or other document signed by electronic signature, as defined by R. S. 9602, and executed in connection with court proceedings, solely on the ground that it was signed by electronic signature.”  Although, attorneys will need to look to local rules or other laws governing the subject matter of those documents  because the comment to La.C.C.P. art. 253 states that “nothing in this provision is intended to abrogate any specific legislation requiring that certain documents be signed by other than electronic means.”