Most people don’t stop to think about whether clicking a box that says “I agree” is truly an enforceable commitment, because it’s so commonplace now in both business and our personal lives. In fact, 20 years ago there were only piecemeal laws to back up an electronic signature,1 but now both state and federal legislatures have enacted protections for e-signed documents.2
But how did Wisconsin get there, and what does the law of e-signed contracts look like today in Wisconsin? This blog article will briefly explore Wisconsin’s enactment of the Uniform Electronic Transactions Act (UETA), including the bill enacting it in our state, the perceived ambiguities present in the law, and cases from other jurisdictions where UETA or other e-signature issues have arisen.
The Uniform Electronic Transactions Act
The UETA is one of the Uniform Law Commission’s recommended acts for state enactment.3 Completed in 1999, it was meant to create a national standard for the legality of electronic record storage and electronic signatures.4 However, before many states were able to enact their version of UETA, the federal government enacted the Electronic Signatures in Global and National Commerce Act (ESIGN).5
Jamie Lumsden, is a 2L at Marquette University Law School and a legal intern at Direct Supply, Inc., Milwaukee, with plans to pursue a career in tax law.
ESIGN preempted old state laws regarding electronic retention and signature requirements, but also allowed states to preempt itself by enacting UETA.6 Some states enacted UETA quickly afterward, but others took longer.7 Today, 47 states (plus Washington, D.C., and the U.S. Virgin Islands) have enacted UETA, and Washington has introduced it in its legislature.8
Wisconsin’s UETA was signed into law, and went into effect in 2004 without any material amendments, making it the controlling electronic signature law for the state.9
Many provisions of UETA are extremely similar to ESIGN, but UETA generally allows for slightly more modification and flexibility in each state, such as including a provision allowing a state to prohibit some electronic documents from satisfying certain requirements or “specifying additional requirements for the retention of any document subject to its jurisdiction.”10
Additionally, UETA is considered more comprehensive than ESIGN.11 Wisconsin’s 2003-04 Legislature introduced its own bill for implementing UETA by including a walkthrough for readers of the differences and perceived ambiguities that still exist under UETA (and ESIGN).12
Some Early Ambiguities
UETA defines terms broadly, which seemed to be the focus of a few paragraphs within Wisconsin’s UETA bill.
“Transaction” could be read to include a standard government filing, but the prefatory note and comments on UETA implies that when applied to the government, a transaction “covers only the actions of the government as a market participant.”13
Another broadly defined term within UETA is the term “electronic record,” which could include a voicemail.14
To alleviate some of the concerns with these terms, the legislature offered its own understanding of these terms’ meanings, noting that references to UETA “records” would be discussed as “documents” throughout the prefatory note.15
Aside from semantics, Wisconsin’s Legislature noted a couple of provisions that, at the time of the enactment, would require further exploration to ascertain the scope. Among these are attribution of a signature to the correct person, agreements to conduct a transaction electronically being determined by context, and a new view of what is considered “in writing.”16
An interesting early case, Alliance Laundry Systems LLC v. Thyssenkrupp Materials, NA,17 provided some additional context, albeit in a footnote about whether emails constitute a writing.
The plaintiff in Alliance switched steel suppliers and the defendant was the pre-switch supplier. In an email exchange, the two parties arranged for the plaintiff to purchase the remaining steel that had been specially manufactured for the plaintiff, but a delay in completing the deal drove the defendant to sell the steel to other customers.18
In his opinion, Judge Lynn Adelman noted that “the parties dispute whether or not they intended to conduct the transaction by email and whether or not defendant's emails constitute a writing signed by defendant. As noted, whether the emails were sufficient to form a contract is a question for the jury to decide by applying UCC rather than UETA principles.”19
Continuing in a footnote, Judge Adelman wrote:
Although defendant argues that under the Uniform Electronic Transactions Act ("UETA"), Wis. Stat. §§ 137.11-137.26, parties cannot form a contract electronically unless they first agree to do so, defendant is not technically correct. The UCC, not the UETA, provides the substantive law that determines whether parties form contract, and nothing in the UCC prohibits the formation of agreements by electronic means.20
As noted below, UETA provisions do not apply to excepted laws, which include the UCC.21
Guidance from Other Jurisdictions
While there are limited Wisconsin cases on the subject, a number of other jurisdictions have provided some additional insights into electronic transactions.
Barwick v. Geico
The Supreme Court in Arkansas addressed a question of whether an online application for car insurance fulfilled a statutory requirement that a rejection of medical benefits be “in writing.”22 The appellant was named as an insured by Government Employee Insurance Co., Inc. (Geico) when he was hit by a vehicle and attempted to submit his medical bills under the policy.23
Geico rejected the claim, because the coverage was waived in the online application.24 The appellant argued that Arkansas statutes required medical benefits coverage to be rejected “in writing” and an online application did not constitute a written rejection.25
The court overlaid Arkansas’s enactment of UETA onto the statutory requirement to conclude that the “electronic record satisfie[d] the law” as directly stated in UETA.26 This decision clarifies that, absent an exception, UETA’s electronic signature and records terms overlay existing state laws and stitches the language together.
Zulkiewski v. American General Life Insurance Company
An unpublished Michigan appeals court case, Zulkiewski v. American General Life Insurance Company,27 provided a thought-provoking scenario about attribution of a signature, i.e., whether an electronic signature was actually created by the person whose signature it purports to be. Specifically, in Zulkiewski, there was a dispute regarding attribution of a signature to a particular person when a transaction is conducted through an online account.
Zulkiewski set up a life insurance policy, presumably through hard-copy application, and changed his beneficiaries once through mailing in a required form.28 Two and a half years later, an online account was set up using Zulkiewski’s policy number, Social Security number, mother’s maiden name, and email address; the newly created account was used to again change Zulkiewski’s beneficiaries.29
When Zulkiewski died six months after the online account was created, his previous beneficiaries argued that the online account was not properly attributed to him and therefore, the beneficiary change was invalid.30 Specifically, they argued that American General did not “show … the efficacy of any security procedure” used in attributing the signature to Zulkiewski – specific language in UETA’s attribution provision.31
The appellate court agreed with the decision of the trial court, and read the provision of UETA as listing one method of proper attribution, but that the measures American General took also constituted proper attribution.32 If the previous beneficiaries felt that the person who created the online account was not Zulkiewski, then their claim would be fraud or some other cause of action, but not invalidity under UETA’s attribution provision.33
Hines v. Overstock.com, Inc.
While not a UETA or ESIGN case, Hines v. Overstock.com, Inc.34 addresses an interesting look into electronic agreements and what can be considered consent to an online agreement.
Overstock.com’s website Terms and Conditions included an arbitration clause and a provision noting use of the website constituted agreement to the Terms and Conditions. Interestingly, the court’s decision wasn’t whether the agreement was enforceable merely by continuing to use the website. Instead, the focus was on whether the website user would have actual or constructive knowledge of the Terms and Conditions to infer acceptance.35
The inclusion of constructive knowledge presents a duality between efficiency for the user and effectiveness for the company. The plaintiff in the case did not have actual notice of the Terms and Conditions. And because the court concluded that Overstock.com had not presented evidence to show the plaintiff had constructive knowledge, the case did not cover what constituted constructive knowledge before assent to the terms would become assumed. In the absence of any contrary evidence, the court concluded the website’s terms
and conditions were unenforceable due to lack of notice.
Since Hines v. Overstock.com, 92 cases have cited the decision, nine positively and three distinguishing its holding.37 Even with the distinguishing cases, the constructive knowledge component of online agreements has not been directly rejected.38
Conclusion: Now Part of the Background
While UETA kicked off in Wisconsin almost 20 years ago to much fanfare and many questions, it has quietly settled into the background of most of our lives and practices as attorneys.
Many attorneys practicing in a business law setting may not think twice about their clients signing through an electronic signature service or challenge their clients on offering ‘click-through’ or online terms.
As the world moves more and more away from paper, it will be interesting to see what the next 20 years of electronic transaction regulation and court cases will bring.
1 See, e.g., Wisconsin 2003-04 Legislature, Assembly Bill 755 at 2-5 (2004).
2 Jeffrey J. Serum, “Legal Effect of Electronic Transactions,” Wisconsin Lawyer, Feb. 2, 2005.
3 Electronic Transactions Act, Uniform Law Commission,
5 Serum, supra note 2.
6 Assembly Bill 755, supra note 1 at 5-6.
7 Electronic Transactions Act, supra note 3.
9 Assembly Bill 755, supra note 1 at 5-6; Serum, supra note 2.
10 Id. at 6-12.
11 Serum, supra note 2.
12 See, Assembly Bill 755, supra note 1.
13 Id. at 6.
14 Id. at 7.
16 Id. at 8-9.
17 Alliance Laundry Sys., LLC v. Thyssenkrupp Materials, NA, 570 F. Supp. 2d 1061, 1063 (E.D. Wis. 2008)
18 Id. at 1063-66.
19 Id. at 1068.
20 Id. at 1066 n.3 (citing UETA Prefatory Note ¶ 3)
21 Assembly Bill 755, supra note 1 at 17 (“[T]his subchapter does not apply to a transaction to the extent it is governed by: … (b) [Wisconsin’s UCC enactment.]”)
22 Barwick v. Gov’t Emple. Ins. Co., 2011 Ark. 128, 128 (2011). See also, A.C.A. § 23-89-203.
23 Id. at 129.
25 Id. at 130.
26 Id. at 134. See also, A.C.A. § 25-32-107.
27 Zulkiewski v. Am., 2012 Mich. App., (June 12, 2012).
28 Id. at 1-2.
29 Id. at 2-3.
30 Id. at 6-8.
31 Id. at 6, 10.
32 Id. at 10-15.
33 Id. at 13-14.
34 Hines v. Overstock.com, Inc., 380 Fed. Appx. 22, 24 (2d Cir. 2010).
37 SeeShepard’s: Hines v. Overstock.com, Inc., 380 Fed. Appx. 22.
38 See, Kasparov v. Ambit Tex., LLC, 2016 U.S. Dist. (E.D. NY 2016); Jensen v. Keybank N.A., 2018 U.S. Dist. (S.D. Ind. 2018); Grosvenor v. Qwest Corp., 854 F. Supp. 2d 1021 (D. Colo. 2012).