GEICO case upholds the law: e-signatures are legally binding

Andrea Masterton, October 9, 2017

It’s a growing trend: in order to be more efficient and improve customer service, more and more companies are using e-signatures to execute contracts, applications and agreements.

In our experience, the question of legality and enforceability is top of mind for companies considering electronic signatures. In fact, it’s very important for a company to understand the legal environment that e-signatures exist in.

Laws governing e-signature have been in place for over ten years now. Both the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA) declared electronic signatures to have the same legal weight as their pen and paper counterparts, emphasizing that the same contract and rules around evidence apply to both.

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Top 6 Legal Risks of E-Signatures & E-Transactions

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Nevertheless, there have since been several cases of contract disputes involving electronic signatures and records. Most of these cases focused on whether signing intent was actually established.

That is why one recent case in Arkansas (Barwick v. GEICO) piqued our interest, because it actually questioned the validity of the UETA law.

Using a click-to-sign e-signature, an insurance client had waived the minimum medical coverage on her insurance plan. Later, after suffering an accident that caused her to incur medical expenses, the insured claimed that the electronic signature was not binding because it was not in ‘writing.’

Specifically, the lawyer for the insured argued that a general statute like UETA did not apply when a specific statute (such as an insurance statute, which stipulates that contracts have to be ‘in writing’) governs.

In a very clear ruling, the Arkansas Supreme Court agreed with the insurance company, GEICO, and upheld a summary judgment made by a lower court that had been in GEICO’s favour.

To paraphrase the ruling: the Court saw no conflict between UETA and the auto insurance statute and noted that the UETA could not be more straightforward in allowing an electronic record to satisfy the law that requires a record to be in writing.

The take-away?  The law governing e-signatures is solid. Looking for more information on leveraging electronic signatures in court? Download our free whitepaper: Top 6 Legal Risks of Electronic Signatures & E-Transactions.