NONPROFIT QUICKTIPSSM
An electronic publication of Pfau Englund Nonprofit Law, P.C.
Disclaimer: This publication is designed to provide accurate information in regard to the subject matter covered. However, it is not intended to provide legal or other professional advice. If legal advice is required, the services of a competent professional should be sought.
When is a faxed signature enough?
As we increasingly become an electronic society, many people are asking when an electronic signature is valid. While the mechanics and authentication of web-based signatures are still being worked, this Quicktip focuses on authenticating a faxed-back signature on a contract.
What’s a contract?
The terms "agreement" and "contract" are often used interchangeably. My legal dictionary defines "agreement" as a broader term meaning any meeting of the minds about obligations between two or more parties. To have a "contract", however, the meeting of the minds must include four essential elements:
competent parties (parties authorized and legally able to make an agreement);
subject matter (to what are you agreeing?);
legal consideration (the cause, motive, price or impelling influence inducing a party to contract); and
mutuality of obligation (each party is bound to perform specified obligations).
While an original, signed document is perhaps the best evidence that a contract or agreement has been made, it is not essential. For example, the Uniform Commercial Code (UCC) defines a signature as including "any symbol executed or adopted by a party with…[intent] to authenticate a writing." A signature on a faxed copy of an agreement or contract should, therefore, qualify as a sufficient "symbol" indicating agreement to the terms of a contract.
Nevertheless, to further limit questions about the validity of a faxed signature, you should consider including a provision in the agreement that explicitly states that faxed signatures are valid, such as:
"This agreement shall be effective when signed below or in counterpart, and photocopy, facsimile, electronic or other copies shall have the same effect for all purposes as an ink-signed original."
Nonprofit QuickTipsSM is a periodic electronic publication of Pfau Englund Nonprofit Law, P.C. It is intended to provide nonprofit executives with useful, quick legal tips. If you have a topic you would like covered in this publication, or know someone who would like to be added to our e-mail list, please contact the firm.