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Promoting E-Legal Behavior:

Litigation And Counseling

Lasagne A. Wilhite

The best way to approach e-legal issues is to

be mindful of the nuances of contract law that
are unique to electronic behavior.

With widespread use of email, the Worldwide

Web, and Internet databases dating back more than 10
years, most might agree that the electronic age is no lon-
ger in its infancy. Yet, the electronic era is still of a very
young age, and is ushering in new bodies of law. The le-
gal field has seen the evolution of many experts in matters
of “e-discovery” and “e-commerce,” and members of the
legal community have also likely heard terms such as “e-
contract,” “e-signature” or “e-tort.” Still, the number of
litigators asserting expertise in the practical import and
scope of legal issues that spring from these concepts is
decidedly less prolific than those in areas of e-discovery
and e-commerce.
Lasagne A. Wilhite is a Litigator with
Unique legal issues arise when parties negotiate con-
Reed Smith LLP’s offices in the District of
Columbia. Ms. Wilhite’s practice focuses
tracts in whole or in part by electronic means, or when
on commercial and regulatory litigation one or more parties sign a contract using an electronic
and counseling. She litigates and counsels signature. Often, however, attorneys tackle issues that
clients in complex disputes involving arise from their clients’ use (or possible misuse) of elec-
contractual obligations, the role of tronic media on an ad hoc basis, applying knowledge and
computerized data and data management experience from cases that are not electronic-media spe-
in meeting contractual duties, defamation
cific to address issues that could benefit from expertise
through media, and contract-based torts.
She also has extensive experience in the
with the electronic spectrum. The law usually takes one
application and interpretation of statutory of three paths:
and regulatory law.

The Practical Litigator | 45

46 | The Practical Litigator January 2009

• Applying the standard legal rules and regula- and purchase of goods or services by electronic
tions to electronic transactions; means.
• Adapting existing standard legal rules to idio-
syncrasies in electronic transactions; or This article will provide guidance on why an
• Adopting new rules of law designed specifically approach that recognizes the unique aspects of e-
for electronic transactions. legal matters better equips attorneys in counseling
their clients and, if necessary, litigating on their be-
Relatively few legal professionals who confront le- half. More importantly, the article will provide ad-
gal issues that relate to electronic media—in both vice on how to apply e-legal considerations to one’s
business and litigation arenas—address them as practice.
distinct issues warranting focused expertise. This
article labels this body of issues as “e-legal” mat- THE IMPORTANCE OF AN E-LEGAL AP-
ters. The body of e-legal matters is broad, ex- PROACH • Communications, business platforms,
tending from e-contracts through international meeting formats, media, document exchange, doc-
e-commerce to e-torts. As such, e-legal issues im- ument sharing, and advertising are all increasingly
plicate a cross-section of several legal areas. Ac- electronic. For instance, in 2001, the Gartner Group
estimated that worldwide revenues from the elec-
cordingly, this article focuses on e-legal matters
tronic exchange of products, services, or informa-
that have great potential to stimulate questions for
tion between businesses (known as B2B or “e-biz”)
a broad range of clients and to spawn litigation:
would reach $7.29 trillion by 2004. Between 2001
the e-legal matters of e-contract and e-signature.
and 2006, B2B had an expected compound annual
“E-signature” is defined as an electronic sound,
growth of 41 percent. See, Definitions,
symbol, or process attached to or logically associ-
B2B, Contributor: Paula Jones (July 21, 2001). The
ated with a record, that a person executes or adopts
consistent thread in all B2B predictions this decade
with the intent to sign the record. An e-signature is
is for high continuous B2B growth for the next sev-
distinct from a digital signature. What qualifies as
eral years in the United States, Japan, and Western
an e-signature is more expansive. A digital signa-
Europe. Id. There has also been significant growth
ture is an algorithmic cryptography, used to simu- in electronic transactions between businesses and
late the security properties of a handwritten signa- government (“B2G”) and between businesses and
ture. One can use a digital signature to execute an individual consumers (“B2C”), although forecasts
electronic signature, but not all electronic signa- for B2B business revenues are greater.
tures are accomplished by digital signature. For an A detailed body of law is developing to ad-
e-signature, the primary inquiry is simply whether dress the issues that arise in the electronic world
there are indicia that a party intended a particular of business. For instance, in November 2005, the
electronic symbol to constitute the party’s signature. United Nations adopted the Convention on the
By “e-contract,” we refer to a binding agree- Use of Electronic Communications in Internation-
ment that is accomplished by electronic means; al Contracts (“E-Contracting Convention”). The
businesses may negotiate the terms electronically, E-Contracting Convention is intended to remove
consummate the agreement electronically, or ef- obstacles to the use of electronic communications
fectuate performance electronically. E-contracting in international contracting. The Convention does
is not the same as the general concept of e-com- not alter the fundamental rules of contract law. It is
merce. E-contracting is more specific than the sale designed to enable parties, not regulate them. The
E-Legal Practice | 47

E-Contracting Convention applies to B2B transac- agement issues for records created using elec-
tions, and addresses fundamental e-contracting le- tronic signature technology);
gal issues, such as preserving freedom of contract, • Uniform Commercial Code (harmonizing the
establishing default rules for electronic communi- law of sales and other commercial transactions
cations, recognizing automated contracts, and es- in all 50 states within the United States).
tablishing default rules for human input errors in
electronic communications. The United Nations For e-signatures, 49 U.S. states, the U.S. Fed-
Commission on International Trade Law published eral Government, and the governments of over 15
the Convention text in 2007. See United Nations countries have enacted or are currently considering
Convention on the Use of Electronic Communi- some form of electronic signature legislation. The
cations in International Contracts, United Nations initiative began with digital signatures—cryptog-
Publication, ISBN 978-92-1-133756-3. Eighteen raphy-based and otherwise—and has expanded to
countries signed onto the Convention during the the adoption of technology-neutral statutes that fo-
signature and ratification period. Several sections cus generally on all types of electronic signatures.
of the American Bar Association (“ABA”) are urg- In light of the onslaught of legislation within
ing the ABA to recommend that the United States the past 10 years to address the increasing impor-
government ratify the Convention as well. See ABA, tance of B2B, B2G, and B2C electronic transac-
Sections of Science & Tech. Law, Int’l Law, Bus. tions, it is important for litigators to be prepared
Law and Intellectual Property Law, Report to the to address their clients’ needs with an e-legal ap-
House of Delegates, dated 8/11/2008, www.aba- proach.
U.S. rules and legislation that govern electronic that involves e-contracts and e-signatures has several
contracts and electronic signatures include the fol- unique aspects that you should know about. Dis-
lowing: cussed below are some of the major points to ex-
• Uniform Electronic Transactions Act (1999) plain how to proceed.
(“UETA”) (unifying differing state laws over
such areas as the validity of electronic signa- Confirm That An E-Contract Exists
tures, thereby supporting the validity of elec- As in all cases, the litigator’s first step in ad-
tronic contracts as a viable medium of agree- dressing a dispute involving an e-contract is to de-
ment); termine whether there are viable claims or defens-
• Electronic Signatures in Global and National es. Because contract disputes typically arise from
Commerce Act (2000) (“E-Sign Act”) (estab- allegations that one party has breached the con-
lishing rules to ensure the validity and legal ef- tract, a litigator must first determine if a contract
fect of contracts entered into electronically); exists that can form the basis for a civil action, and
• Government Paperwork Elimination Act then whether there is a breach upon which a party
(“GPEA”) (1998) (requiring, as of 2003, that can seek damages. Litigating contract disputes in
federal agencies use electronic forms, electronic which all or part of the contract formation or per-
filing, and electronic signatures to conduct of- formance has been electronic involves the standard
ficial business with the public when practicable, considerations for traditional contract disputes,
and giving focused guidance on records man- plus specific attention to technical considerations.
48 | The Practical Litigator January 2009

Accordingly, the first step is to determine whether ceptance is often critical. Under the common law
the fundamental elements are present to establish “mailbox rule,” the general rule is that a contract
the existence of a contract: offer, acceptance, and is made when the acceptance is dispatched. Thus,
consideration. Further, a litigator should determine consent is deemed to be fully communicated when
whether facts exist to support a finding of consent the offeree has placed his acceptance in the course
(described as “mutual assent”), and whether a con- of transmission to the offeror. An adverse party’s
tract that is supposed to be in writing is in writing. assertion that the party never received or opened
For e-contracts, determining when a party has the acceptance if of no consequence.
made a complete offer, whether an offer has been For e-contracts, the dispatch rule applies for ac-
accepted or rejected, or when a contractual duty ceptance sent by email, but does not apply for con-
has been performed involves an intersection of tracts formed via a Web site page. Regarding email
contract law, statutory interpretation and techno- acceptance, courts have held that an acceptance of
logical knowledge. For instance, is an offer “made” a contract may be transmitted by any means which
when a party sends electronic mail detailing terms, the offeror has authorized the offeree to use. If so
when the recipient receives the email, or upon re- transmitted, the acceptance is operative and com-
ceipt of some kind of notification that the email pletes the contract as soon as it is put out of the
recipient has viewed the email? Similarly, at which offeree’s possession, without regard to whether it
corresponding response stage is an offer deemed ever reaches the offeror, unless the offer otherwise
“accepted”? Also, at what point can an interced- provides. In short, the method of acceptance must
ing electronic rejection or revocation of the offer be a reasonable response to the offer. If the parties
defeat formation of a contract? have been corresponding by email, then email is a
reasonable means to accept the offer.
1. Has There Been An Offer? Whether the offeror left the mode of acceptance
As in traditional contracts, an offer transmitted up to the offeree is also relevant to determining
through electronic media is a proposal to make a what is a reasonable response to an offer. If the of-
deal. The offer must be specific enough to identify fer clearly defines that an acceptance is not deemed
the basic obligations under the contract. An offer accepted until it is received, then the mailbox rule
must be communicated to another person and re- will not apply. If, however, the option was left open,
main open until it is accepted, rejected, retracted, then the mailbox rule does apply for electronic con-
or has expired. tracts involving the exchange of emails. IBLS Edi-
torial Board, The Mailbox Rule and Electronic Contracts,
2. Has There Been An Acceptance? International Business Law Services (2001-2008).
Acceptance is an acknowledgment by the per- The mailbox rule applies to emailed acceptance
son to whom the offer was made that the offer is because, while email communications can be sub-
accepted. The acceptance must comply with the stantially instantaneous, there can also be a delay
terms of the offer and must be communicated to time of minutes to days before the email reaches
the person who proposed the deal. The acceptance the recipient’s server. The mailbox rule can avert
stage of contract formation gives rise to the great- contract formation disputes that may arise due to
er part of contract formation disputes. Questions the delay inherent in email. Therefore, under the
arise as to which terms have been “accepted,” and, mailbox rule, a contract for the sale of the goods
because business negotiations often involve pro- enumerated under the contract would form as soon
tracted back and forth, pinpointing the time of ac- as the acceptance is dispatched via email.
E-Legal Practice | 49

Nonetheless, the law gives the offeror a modest party sends an acceptance by email after the off-
amount of protection. If the acceptance message eror sends an email revocation, but the offeree re-
somehow gets lost in the vast realm of cyberspace, ceives the revocation after sending the acceptance
the offeror may assume that the acceptance has not (e.g., due to server delays), the offeror’s revocation
been accepted. would be inoperative.
The receipt rule, rather than the mailbox rule,
should govern contracts formed via Web sites,
5. Was There A Rejection Before
which means that acceptance is deemed valid when
it is received, not dispatched. The receipt rule is
If the offeree rejects the offer, the offer has been
more appropriate for Web site contracts because,
unlike electronic mail, Web site communications destroyed and cannot be accepted at a future time.
are two-way communications; the parties are in For electronic communications, a rejection is op-
constant contact because these communications are erative when the offeror receives it.
instantaneous and generally as fast as a telephone
conversation. Web site communications are gener- 6. Was There Consideration?
ally not going to be lost in the realm of cyberspace. Consideration is the bargained-for exchange. It
Therefore, in the sale of goods, for example, when is the legal benefit received by one person and the
an offeree clicks on a Web site to place an order, legal detriment imposed on the other person under
a contract is formed. If the offeror cannot fill the the contract. Consideration typically takes the form
order, then there would be a breach of contract. of money, property, or services. Typically, the issue
IBLS, The Mailbox Rule (2001-2008), supra.
of whether consideration is adequate is unaffected
by the use of electronic media.
3. Was There A Counteroffer, Rather Than
A counter-offer acts as a rejection and closes 7. Was There Consent?
the original offer. The original offer cannot be ac- Consent means that each party to the contract
cepted at a future time. Counteroffers sent by elec- must agree to the terms of the contract. The law
tronic means are subject to the same rule as those presumes that a party has consented to a contract
sent by hard copy: they are effective upon receipt, by signing it or manifesting some other type of as-
not dispatch. The mailbox rule applies only to the sent, such as using a mouse to click on “I accept”
dispatch of an acceptance. buttons in Web site dialog boxes on a computer
screen. The click of the “I accept” button is one
4. Did The Offeror Effectively Revoke The example of consent given in an “e-legal” manner.
Offer Before Acceptance?
Email presents another electronic avenue for pro-
If the offeror revokes the offer before accep-
viding consent. As recently as April 2008, the ju-
tance, the offer has been destroyed and cannot be
diciary held that a party consented to changes in
accepted at a future time. As a rule, an offeror can-
not revoke an offer after acceptance, but exceptions a contract that the plaintiff and defendant negoti-
apply (e.g., for the purchase of goods found not to ated in a series of emails, because the emails bore
conform to the agreement). Generally, revocation each party’s typed name at the foot of his messages.
of an offer is effective when received. This rule also See Stevens v. Publicis, S.A., 50 A.D.3d 253 (N.Y. App.
governs revocations sent electronically. Thus, if a Div. April 1, 2008).
50 | The Practical Litigator January 2009

8. If Required, Is The Agreement In nied legal effect merely because it is in electronic

Writing And Signed By The Parties Who Are format. Case precedent establishes that neither the
To Be Bound? common law nor the UCC requires a handwrit-
All 50 states have enacted laws that generally ten signature, and the sender’s name on an email
require a contractual agreement to be in writing satisfies the signature requirement of the statute of
and signed by the parties who seek to be bound in frauds. A review of case law reveals that whether
order for the agreement to be enforceable. These an email is “signed” likely will not turn on the lack
laws are known as the “statute of frauds.” The typi- of a typed-in or inserted signature at the bottom
cal statute of frauds includes contracts that involve of the email, but on whether the language of the
the sale of land, certain guarantee or surety con- email or procedures surrounding it are sufficient to
tracts, and contracts which by their own terms can- satisfy intent requirements. Raymond T. Nimmer
not be performed within one year from the date and Holly K. Towle, The Law of Elec. Commercial
of their formation. In addition, the Uniform Com- Transactions, ¶418[4] (Aug. 2007), available at the
mercial Code (“UCC”) Article 2, which applies to Westlaw Identifier Database “ECOMTR”.
contracts for the sale of goods having a price of Some courts may raise concerns about reliabil-
$500 or more, requires a writing. Further, thou- ity, questioning whether transactions that telegraph
sands of other federal, state, and local statutes and a signature or affect the stages of contract formation
regulations require transactions to be documented via electronic media are more subject to tampering
by a writing and a signature. See, e.g., Rep. of the than paper transactions. These concerns should not
Nat’l Conf. of Comm’rs on Uniform State Laws, affect whether an electronic transmission qualifies
Uniform Electronic Transactions Act, Task Force on State as a writing. Any such concerns should be relevant
Law Exclusions (Sept. 21, 1998). only to authentication of a particular transmission
Again, the Publicis case is instructive. Early this for evidence purposes.
year, the Publicis court found that contractual modi-
fications sent by email satisfied the requirements Select The Claims Or Defenses To Raise
in that case that contractual changes be “in writ- On Behalf Of The Client
ing” and “signed.” In a decision favorable to the Once a litigator determines that a valid con-
author’s colleagues at Reed Smith LLP (as counsel tract exists that can form the basis of civil claims for
for defendant), the court held that recorded emails damages, the litigator can determine which claims
qualified as a document “in writing,” and the typed or defenses to assert on behalf of his client. The
name that appeared at the bottom of each party’s following is a non-exclusive list of potential claims
email qualified as a signature. The court explained and defenses that a litigator can assert on behalf of
that “plaintiff ’s name at the end of his email signi- his client, depending on the circumstances of the
fied his intent to authenticate the contents.” Other individual case. Generally, the same claims exist for
courts have also acknowledged that email commu- e-contracts as for traditional contracts.
nications can satisfy statutory requirements that a
contract be in writing and signed, including courts Potential Claims
in the First, Second, and Seventh Circuits. Potential claims or actions could include:
Further, the courts have recognized that the • Breach of contract;
E-Sign Act provides that, in all transactions in or • Breach of fiduciary duty;
affecting interstate commerce, a contract or other • Breach of the covenant of good faith and fair
record relating to the transaction shall not be de- dealing;
E-Legal Practice | 51

• Tortious interference with contract; an electronic transaction effects an offer, accep-

• Declaratory judgment on obligations under the tance, rejection, or rescission are also important for
contract; assessing the propriety of a judicial forum. These
• Specific performance; questions are important because courts resolve
• Fraud (including claims under consumer fraud questions of personal jurisdiction (see Erie Railroad
statutes); Co. v. Tompkins, 304 U.S. 64 (1938)), venue (see 28
• Misrepresentation. U.S.C. §§1391, 1404), and conflict of laws (see Phil-
lips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)) by
Potential Defenses the place of a contract’s formation, performance,
Potential defenses include: or injury.
• No valid offer; Under common jurisdictional principles, a
• No valid acceptance; court may exercise personal jurisdiction over a par-
• No valid consideration; ty that does not reside in a forum when the non-
• There was no consent; resident defendant creates minimum contacts with
• The contracting party was not competent to en- the forum by purposefully directing his activities
ter into the contract (e.g., was below the thresh- at residents of the forum, and the litigation results
old age of 18, was mentally disabled, etc.); from alleged injuries that arise out of or relate to
• The contract is not in writing, as required by those activities. Burger King Corp. v. Rudzewicz, 471
the statute of frauds or other laws or regula- U.S. 462 (1985). Consequently, jurisdiction is prop-
tions; er where the nonresident defendant has deliberate-
• The agreement is not signed, as required by the ly engaged in “significant activities” in the forum,
statute of frauds or other laws or regulations; thus creating a “substantial connection” with the
• The contract is voidable due to fraud; forum such that the nonresident defendant should
• The contract is voidable due to duress or the reasonably anticipate being haled into court in the
exertion of undue influence; forum. From an e-legal standpoint, litigators must
• The contract is void because it is against public appreciate that when a client performs electronic
policy; transactions, such conduct can constitute activities
• Mutual mistake as to a material part of the in a forum, or establish a substantial connection
contract provides grounds for either party to with a forum. Thus, litigators should rely on the
rescind or for a reformation; following guidelines to resolve the initial question
• Unilateral mistake permits rescission under the of whether personal jurisdiction over a party will
circumstances; be proper in a given state:
• Lack of standing or contractual privity to en-
force the contract. • A party has sufficient minimum contacts with the state
from where the party sends electronic communications,
Determine Whether Personal Jurisdiction regardless of whether the transmission constitutes an
Is Appropriate offer, acceptance, counter-offer, rejection, revocation, or
In addition to contemplating the substantive effort to rescind a contract. The sender typically is
claims or defenses for his client, a litigator should deemed to be conducting business at the busi-
determine at an early stage where litigation may ness site that the sender uses to transmit such
properly proceed against the party adverse to his emails. Similarly, a party has sufficient contacts
client. The questions raised above regarding when with the forum where emails originate when
52 | The Practical Litigator January 2009

those emails are used to commit a contract-re- far reaches of the earth for pecuniary gain, one
lated tort, such as intentional interference with does so at her own peril, and cannot then claim
contract; that it is not reasonably foreseeable that she will
be haled into court in a distant jurisdiction to
• A party has sufficient minimum contacts with the forum
answer for the ramifications of that solicitation.
where the party will perform its obligations under the con-
In holding that a business purposefully directs
tractual agreement. For instance, if a party enters
into contracts with residents of a foreign juris- its conduct toward a state through an email so-
diction that involve the knowing and repeated licitation, courts have emphasized that, in con-
transmission of computer files to or from that trast to having an Internet Web site, the active
forum, personal jurisdiction is proper; as opposed to passive nature of email weighs
• The party does not have sufficient minimum contacts in favor of finding personal jurisdiction in the
with the forum to which the party sends electronic com- forum to which the email is directed;
munications to negotiate or complete a contract based • A party who simply places information on the Internet
on those transmissions alone. Email and telephone does not subject himself to jurisdiction in each state into
communications, standing alone, do not provide which the electronic signal is transmitted and received.
the “minimum contacts” required by due pro-
A passive Web site that does little more than
cess. The use of interstate lines of communica-
make information available to those who are
tion such as email, facsimiles, and telephones
interested in it is not grounds for the exercise
is not automatically a purposeful availment of
of personal jurisdiction. The internet Web site
the privileges of conducting commerce in a fo-
must target users of the forum state, and the
rum state such that a nonresident should antici-
use of the Internet Web site must engage the
pate being haled into court there. To establish
party in such a way that the underlying transac-
personal jurisdiction, the court must have juris-
tion that gives rise to the claim occurs as a result
diction based on other contacts related to the
of using the Web site. A court may exercise per-
agreement at issue, or have general jurisdiction
sonal jurisdiction over a party where the party
over the party based on the party’s unrelated
contacts with the state. In short, email and tele- forms contracts with persons in the forum state
phone communications can be one factor that via the party’s Web site. Where a Web site en-
supports the exercise of jurisdiction, but must gages a party in a way that a transaction gives
be accompanied by other contacts to justify rise to the claim as a result of using the Web
personal jurisdiction. Litigators should note site, courts find personal jurisdiction in the state
that contracting by email is distinct from send- where the Web site user is located.
ing spam emails. A company that sends spam
emails is subject to personal jurisdiction in the Determine Whether Venue Is Appropriate
jurisdiction where the email is received; In The Selected Or Preferred Forum
• The courts’ approaches to email solicitations are not Upon determining that personal jurisdiction in
unanimous. Litigators should be mindful that a given state is appropriate, a litigator can turn to
some courts find that sending mail is sufficient identifying which judicial district or districts are the
to establish jurisdiction over the sender in the proper venue(s) for the suit under the venue provi-
destination forum, where the email is related sions of 28 U.S.C. §1391. A litigator must deter-
substantively to the litigation. Some courts have mine whether venue is proper in a particular forum
held that by sending an email solicitation to the according to the following rules of law:
E-Legal Practice | 53

• Venue is proper in any judicial district where • Venue may be proper in the jurisdiction in
any defendant resides, if all the defendants re- which a party negotiates the terms of a con-
side in the same State; tract by directing email communications to that
• Venue is proper in any judicial district in which jurisdiction, or where a party directs an offer.
a substantial part of the events or omissions giv- In assessing whether venue may be appropri-
ing rise to the claim occurred, or a substantial ate in the district in which a recipient receives
part of property that is the subject of the action emails that contain contract terms or proposals,
is situated; this guideline assumes that the email recipient
• Venue is proper in any judicial district in which receives the communication in a location where
any defendant may be found, if there is no oth- the recipient is expected to receive such com-
er district in which the plaintiff can bring the munications. Where, for example, a recipient
action; accesses electronic communications while in
• When jurisdiction is founded solely on diver- transit (e.g., in an airport, in flight, on a train,
sity of citizenship, venue is proper in any judi- or in a hotel room), venue may not be appropri-
cial district in which any defendant is subject ate based on the place of receipt alone;
to personal jurisdiction at the time the action • Venue is not proper in districts that email com-
is commenced, if there is no other district in munications “pass through.” Specifically, when
which the plaintiff can bring the action; the events giving rise to the litigation took place
• When e-contracts or e-signatures are at issue, in one state, but emails related to the events
the first and third rules for establishing venue passed through a computer server in another
remain straightforward, but the second and last state, venue is not proper in the latter state. The
rules can raise questions about the propriety passage of emails through a state is too tenuous
of venue. The issues outlined earlier regarding a connection for the purposes of establishing
when an electronic transmission effects an offer, venue;
acceptance, rejection, or revocation bear heav- • Venue is not appropriate when an electronic
ily on where “a substantial part of the events communication consists of only a solicitation
or omissions giving rise to the claim occurred,” for business. The mere solicitation of business
and on whether there have been sufficient con- in a particular county by email does not amount
tacts with a jurisdiction for “any defendant [to to conducting business.
be] subject to personal jurisdiction at the time
the action is commenced”; COUNSELING CLIENTS E-LEGALLY FOR
• Venue may be proper in the jurisdiction from E-CONTRACTS OR E-SIGNATURES • Liti-
which a party sends an electronic transmission, gators should not only use the litigation guidelines
e.g., where an email originates; and law set forth above as checklists for litigation,
• Venue may be satisfied by a communication the litigator should also use the guidelines to teach
sent from the district in which the party filed clients about how to e-contract efficiently and in
its claim, when there is a sufficient relationship a self-protective manner, to avoid pitfalls in e-con-
between the communication and the claim; tracting and e-signing, including the costly burden
• Likewise, venue may be satisfied by a commu- and expense of litigating e-contract matters.
nication to the district in which the party filed For instance, the guidelines discussed above re-
its claim, when there is a sufficient relationship garding jurisdiction and venue can educate clients
between the communication and the claim; regarding their potential vulnerability to suit in
54 | The Practical Litigator January 2009

jurisdictions beyond their principal places of busi- The Stevens v. Publicis case described above fuels
ness. For example, a litigator may instruct his client additional important counsel to impart. The case
that a Web site that provides information about the presents a cautionary tale for clients. The agree-
client’s company, and that is accessible from any ment in Publicis required that any modification be
computer that has Internet access, is likely insuf- signed by all parties. The Supreme Court for New
ficient to establish the minimum contacts necessary York County held that the recorded emails satisfied
to subject the client to personal jurisdiction in any the “writing” requirement, and the typed name
jurisdiction where a user can access the Web site. A of the parties at the end of their emails satisfied
client may be subject to personal jurisdiction, how- the signature requirement. Accordingly, litigators
ever, if the client’s Web site contains language aimed should counsel their clients to add language in na-
at soliciting the business of users that access the ture of the following to the customary clause re-
site. The scope of the personal jurisdiction would quiring amendments to be in writing:
depend on the market that the Web site targets, i.e.,
whether the client’s Web site targets local, regional, Electronic mail, including electronic mail that bears an elec-
or national users that access the site. When a Web tronic “signature block” identifying the sender, does not con-
site solicits business, the Web site constitutes an ef- stitute signed writings for purposes of this agreement.
fort to distribute goods or services into the stream
of commerce of the targeted jurisdictions, thereby Otherwise, clients run the risk of an email ex-
subjecting the client to personal jurisdiction for the change resulting in an unintended amendment to
client’s general contacts with the jurisdiction. the agreement.
Contract formation via Web sites is another Additional general advice regarding email ex-
subject for client counseling. Typically, Web site changes is to keep track of the final exchanges in
point-and-click agreements require an offeree to the negotiation process to ensure that all parties
manifest his or her unequivocal acceptance of the understand each other’s intent. It is not unusual
terms of the agreement, as stated, simply by point- for parties to engage in protracted negotiations
ing and clicking on an icon labeled “YES,” “I AC- and exchanges before finally arriving at a common
CEPT” or “AGREED.” Potential legal issues can ground. Only the final offer that a party accepts
arise even at this early stage of e-contracting. If, for will create the binding agreement. Unless the last
example, the user accidentally clicks on the wrong email transmission by the offering party is complete
icon, the offering party would naturally deem this in all of the terms discussed beforehand, a dispute
an acceptance of the agreement and proceed to may arise as to which terms the offeree accepted. A
perform its terms. Therefore, attorneys should court might be required to discern a single agree-
counsel merchant clients that they should require ment by referring to a series of email transmissions.
their online customers to confirm their acceptance Thus, the need to maintain complete and accurate
of the agreement to avoid the defense of “acciden- electronic records is very important for contracts
tal acceptance.” A client may, for example, require formed by email. The same is true for contracts
customers to click on a second icon or to type in formed by point-and-click transactions. Liberto,
certain information as part of the acceptance pro- supra.
cess. Shelley M. Liberto, Virtual Contracts: Don’t Point Further, litigators should counsel their clients
and Click Your Way Into a Lawsuit, WWWiz Maga- that the ability to generate hardcopies of virtual
zine (Oct. 1997), available at deals is critical. A litigant will have to prove the ex-
isue14/f02.html. change of communications regardless of whether
E-Legal Practice | 55

one is seeking to enforce, interpret or avoid a con- is legal as a “writing,” and any symbol that a party
tract. Hardcopy documentation is not absolutely uses to represent the party’s intention to authenti-
necessary, but a party’s reliance solely on oral tes- cate the communication is a legal “signature.”
timony as to communications and conduct will
create evidentiary problems. Therefore, a litiga- Can The Client Trust The Message?
tor should inform his client that the client should Some electronic media are more susceptible
maintain electronic records of point-and-click and to tampering than others. Clients want to know
email communications that can be converted to whether it is safe to rely on electronic messages and
hardcopy. Hardcopies generated from email ex- enter into legal commitments to provide a service,
changes will carry more weight if the data is stored ship products, transfer funds, extend credit, or enter
by a third party and contains electronic safeguards into any other commitment. Trusting an electronic
against alteration or deletion of messages. The use message requires consideration of the authenticity
of hardcopy evidence of electronic dealing will re- of a message, its integrity, the ability to prevent a
quire testimony of the authenticity of data in terms sender from denying that he sent the message and
of date of entry, manner of entry, and method of the ability to foreclose claims that the message ul-
retrieval. Liberto, supra. timately received has been altered. For instance,
Aside from the focused advice that litigators a typewritten name inserted at the bottom of an
can derive from the e-contracting guidelines above, email qualifies as a signature, but a defendant can
clients may have general questions about whether deny that he was the one that inserted his name.
to rely on e-contracting in their businesses, or how Some statutes that deal with electronic com-
to do so. Three fundamental questions arise when munications address the trust issue, building in an
considering e-legal issues: evidentiary presumption regarding a sender’s iden-
• Is it legal? tity and the integrity of the message, setting forth
• Can the client trust the message? and required attributes for a transmission to be enforce-
• What are the rules of conduct? able, or identifying a class of trustworthy electronic
communications or signatures. Most electronic sig-
See Thomas J. Smedinghoff & Ruth Hill Bro, nature statutes, however, do not address the trust
Electronic Signature Legislation, FindLaw (Jan. 1999), issue at all. In the absence of a statute, it can be
available at difficult for a plaintiff to prove the authenticity of
1/241481.html. the signature.
Thus, a litigator should consider counseling
Is It Legal? clients to weigh risks. When the amount at issue
Many clients may be concerned that e-contracts is small or there is low risk, a client can be more
and e-signatures may not meet federal and state inclined to trust in the electronic message’s authen-
law requirements that transactions be documented ticity and integrity. Yet, when the risk is higher, au-
in “writing” and be “signed.” As discussed earlier, thenticity and integrity are more critical issues. In
courts are finding that electronic transmissions sat- such cases, the litigator should consider counseling
isfy the writing and signature requirements. As long the client against relying on electronic communi-
as the transmission can be recorded and reduced cations, and toward relying on more time-honored
to tangible form, and as long as the transmission communications instead (e.g., hardcopy mail or
evinces a party’s intent to be bound by the com- facsimile). When a client is inclined to employ and
munication, a recorded electronic communication rely upon electronic communications regardless of
56 | The Practical Litigator January 2009

the size or the extent of the risk, litigators should and the United Nations’ E-Contracting Conven-
counsel clients that the client needs to know at the tion. Thus, when an e-legal issue arises, litigators
time of reliance whether the message is authentic, seeking to represent their clients proficiently should
the integrity of its contents is intact, and the rely-
refer to the statutes crafted to deal with e-legal is-
ing party can establish both of these facts in court
if a dispute arises. See Smedinghoff & Bro, Electronic sues specifically, rather than attempt to deduce the
Signature Legislation, FindLaw. appropriate result under traditional contract law.
That is not to say that legislators and the courts
What Are The Rules Of Conduct? have anticipated all e-legal issues and set forth rules
In many ways, the rules for e-contracting are
accordingly. Undoubtedly, there will continue to be
similar to the rules for paper-based contracting. In
matters of first impression that confront litigators
some instances, however, issues arise that a litiga-
tor cannot answer easily by extending traditional and the courts. Yet the body of e-legal statutes and
contract law. For example, if one party to an agree- regulations provides a finer reference point to ascer-
ment prefers to use electronic means to express tain the best legal approach than the body of tra-
agreement and finalize a contract, but the client ditional contract law, which has not accounted for
does not want to rely on electronic authentication
many issues generated by electronic technology.
(or vice versa), the client may question whether the
client is required to defer to the other party’s au-
thentication choice. The answer is “no”; the client CONCLUSION • As e-contracting becomes more
is not required to consent to electronic authentica- and more the norm, litigators must be equipped
tion. Section 6 of the Digital Signature And Elec- to counsel their clients about how they can best
tronic Authentication Law of 1998 (“SEAL”) states conduct themselves in their business transactions.
that an electronic authentication may be used only Today, litigators should be prepared to advise as
if both parties agree to use them.
to when it is appropriate to use an e-signature to
An example of another e-legal issue for a client
is how a business (e.g., a financial institution) must effect the equivalent of a digital handshake, ver-
conduct itself it if wishes to provide to consumers sus the circumstances in which the traditional sig-
electronic disclosures exclusively, in lieu of written nature inked by hand is more judicious. Litigators
disclosures. The E-Sign Act permits a financial in- should also be prepared to represent their clients
stitution to issue electronic records to consumers
in litigation when e-contracting or the general use
to satisfy any statute or regulation that requires
of electronic media results in claims against the cli-
that such information be in writing, as long as the
consumer consents. Yet, before a consumer can be ent, or incites a client to seek civil damages for an
deemed to consent, the financial institution must injury. The best way to approach e-legal issues is to
provide information to the consumer regarding the be mindful of the nuances of contract law that are
consumer’s rights and options. See E-Sign Act, Title unique to electronic behavior. Accordingly, litiga-
1, Section 101(c)(1), 15 U.S.C. §7001 (c)(1).
tors should use this article and the many state, fed-
The E-Sign Act and SEAL are just two of the
many state, federal, and international statutes that eral, and international laws concerning electronic
legislators have enacted to respond to e-legal issues. transactions to ensure that their clients are engag-
As described above, others include UETA, GPEA ing in e-legal behavior.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.