John G. Browning 2017-11-22 22:32:53
A look at the validity of email signatures as contracts. In today’s digital age more and more businesses are conducting transactions electronically. By one 2015 estimate, over 205 billion emails are sent and received every day.1 Congress and nearly all states have facilitated the spread of electronic commerce through laws governing the validity of electronically signed documents and electronic transactions. At the federal level is the Electronic Signatures in Global and National Commerce Act, or “E-Sign Act,” enacted in 2000. At the state level, there is the Uniform Electronic Transaction Act, or UETA, which makes the E-Sign Act applicable to electronic signatures and transactions governed by state law. Both the federal statute and its state counterparts treat electronic transactions and signatures the same as more traditional ink-and-paper documents and transactions. But while Texas, which adopted the UETA in 2001, has generally followed this trend, a recent split of authorities among the state’s appellate courts has made the question of whether the signature line in an email actually constitutes a “signature” (for the purpose of satisfying the statute of frauds) a bit murkier. First, let’s provide some background. Texas’ UETA states that, “[i]f a law requires a record to be in writing, an electronic record satisfies the law.”2 It further holds that “[i]f a law requires a signature, an electronic signature satisfies the law.”3 And just what is an “electronic signature” according to the UETA? It 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.”4 More specifically, an electronic signature is “attributable to a person if it was the act of the person,”5 the effect of which can be 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.”6 In interpreting these requirements, Texas courts have generally found that an electronic signature is enforceable if the sender signs off on the email with his or her name and if it is reasonably apparent from the context of the communications, or from the parties’ actions, that both sides have agreed to conduct transactions electronically. Courts have generally recognized that an email is signed if the sender’s name is on an email, the email is generated from the sender’s email address and closes with at least the sender’s first name, or if it contains a header with the sender’s name even if the typed name does not appear at the bottom of the email itself. For example, in Parks v. Seybold, the 5th Court of Appeals in Dallas held that emails concluding with “Thank you, Clyde Parks” immediately above a block containing Parks’ full name and contact information sufficiently demonstrated that Parks had signed the emails himself.7 Although Parks contended there was no evidence of any written or independent agreement that he had agreed to conduct business transactions electronically, the appellate court disagreed, ruling that the parties’ discussions and conduct showed that they agreed to transact business electronically.8 In Dittman v. Cerone, involving an option contract for the sale of property in Harris County, the 13th Court of Appeals in Corpus Christi held that a series of three emails constituted an enforceable contract and that the email signature block was a valid signature.9 It also found that the record showed the parties had agreed to conduct business by electronic means. And now for the fly in the ointment. In a 2011 case, Cunningham v. Zurich American Insurance, the 2nd Court of Appeals in Fort Worth held that the signature line in an email did not constitute a signature.10 The case involved a breach of contract suit over a purported Rule 11 agreement settling claims in a medical malpractice case on appeal. The case turned on whether an email from one of the insurance carriers’ attorneys was actually signed and constituted an enforceable agreement under Rule 11. The appellate court observed that “[t]here is nothing to show that the signature block was typed by Grabouski and not generated automatically by her email client.”11 Furthermore, the court noted, “[i]f Grabouski did personally type the signature block at the bottom of the email, nothing in the email suggests that she did so with the intention that the block be her signature.” The court declined to hold “that the mere sending by Grabouski of an email containing a signature block satisfies the signature requirement when no evidence suggests that the information was typed purposefully rather than generated automatically, that Grabouski intended the typing of her name to be her signature, or that the parties had previously agreed that this action would constitute a signature.”12 Accordingly, the court ruled, the email was not signed and so did not meet the requirements of Rule 11. The Cunningham decision has met with sharp criticism. In the case of Williamson v. Bank of New York Mellon, the U.S. District Court for the Northern District of Texas dealt with a similar question of whether emails exchanged regarding settlement constituted an agreement enforceable under Rule 11.13 Applying the UETA and holding that the plaintiff’s former attorney’s act of signing his email with his typed name was a signature within the meaning of the act, the federal court found that “[a] typed name at the end of an email is similar to a ‘signature’ on a telegram, the latter of which can satisfy the statute of frauds.”14 The court specifically rejected the rationale of Cunningham, reasoning that the attorney created the signature block and directed his email client to attach it to his outgoing emails; that the UETA should be construed broadly; and that permitting a signature block to have the same effect as a typed signature would be consistent with reasonable practices regarding electronic transactions and with the continued application and expansion of these practices. More recently, in Khoury v. Tomlinson, the 1st Court of Appeals in Houston weighed in on the issue of an email signature block as an enforceable signature for purposes of the statute of frauds.15 The Khoury case involved an agreement in which John Khoury invested in PetroGulf, a company run by Prentis Tomlinson and which supposedly had a contract to sell oil from Iraq into Syria. After the investment didn’t pan out and Tomlinson admitted that the claimed Syria contract did not exist, Khoury and Tomlinson reached a verbal agreement calling for Tomlinson to repay Khoury’s investment. Khoury sent an email summarizing the terms of the agreement, and Tomlinson responded, “We are in agreement...” However, his name did not appear in the body of the email. Tomlinson failed to repay Khoury, resulting in a lawsuit for fraud, breach of contract, and violation of the Texas Securities Act. Although the jury found for Khoury on all three claims, the trial court set aside the breach of contract finding, ruling that the statute of frauds barred enforcing the oral agreement that was summarized in Khoury’s email. The court reversed, concluding that the appearance of someone’s name or email address in the “from” line of an email constitutes a signature, thus satisfying the statute of frauds.16 The court specifically considered the UETA, caselaw interpreting the act, and dictionary definitions of the word “sign,” as well as the underlying purpose of the statute of frauds. Like the Williamson case, the Khoury holding criticized the Cunningham decision, particularly its lack of any explanation for “why physically typing in a signature line at the time of drafting the email should be required for a ‘signature block’ to constitute a signature.”17 The court concluded, “A signature block in an email performs the same authenticity function as a ‘from’ field. Accordingly, it satisfies the requirement of a signature under the UETA.”18 Yet Cunningham has never been overruled, resulting in a split of authorities on the issue of email signatures that awaits resolution by either the Texas Supreme Court or the Legislature. Since a trial court is bound by the decisions of the court of appeals that covers its district, attorneys should carefully consider the venue implications of any dispute that might involve email signatures and the statute of frauds. But beyond that, be aware that a typed signature or an email can create an enforceable contract, and counsel your clients (and yourself) accordingly. Out of abundance of caution, you may wish to abandon the standard signature block and create a new one that contains Rule 11 disclaimer language, such as wording that states that your email exchange is not intended to form any agreement between sender and recipient. After all, as the unsettled legal landscape in the area demonstrates, no ink doesn’t necessarily mean no problems. Notes 1) Email Statistics Report, 2015-2019, The Radicati Group, https://www.radicati.com/?p=12960. The report further estimated that this figure would grow at an average annual rate of 3% over the next four years, reaching over 246 billion per day by the end of 2019. 2) Tex. Bus. & Com. Code § 322.007 (c). 3) Id. at (d). 4) Tex. Bus. & Com. Code § 322.002 (8). 5) Tex. Bus. & Com. Code § 322.009 (a). 6) Id. § 322.009 (b). 7) Parks v. Seybold, No. 05-13-00694, 2015 WL 448179 (Tex. App.—Dallas 2015, no writ). 8) Id. 9) Dittman v. Cerone, No. 13-11-00196-CV, 2013 WL 865423 (Tex. App.—Corpus Christi 2013). 10) Cunningham v. Zurich Am. Ins. Co., 352 S.W.3d 519, 529 (Tex. App.—Fort Worth 2011, no writ). 11) Id. 12) Id. at 530. 13) Williamson v. Bank of New York Mellon, 947 F. Supp. 2d 704, 710-11 (N.D. Tex. 2013). 14) Id. 15) Khoury v. Prentis Tomlinson Jr., No. 01-16-00006-cv, (Tex. App.—Houston [1st Dist.] March 30, 2017), http://caselaw.findlaw.com/tx-court-of-appeals/1854824.html. 16) Id. 17) Id. 18) Id. JOHN G. BROWNING is a partner in Passman & Jones in Dallas, where he handles commercial litigation, employment, health care, and personal injury defense matters in state and federal courts. He is an award-winning legal journalist for his syndicated column, “Legally Speaking,” and is the author of the Social Media and Litigation Practice Guideand a forthcoming casebook on social media and the law. He is an adjunct professor at SMU Dedman School of Law.
Published by State Bar of Texas. View All Articles.
This page can be found at http://mydigimag.rrd.com/article/No+Ink%2C+No+Problems%3F+/2944126/456730/article.html.