The Shadow Cursor:
Keeping Current on Electronic Records

by the Shadow

Odds are, Dear Reader, that you are reading this missive on a computer monitor and that no tree need make the ultimate sacrifice for you to read the Shadow’s quiet rants and ramblings. But what about the Georgia widget manufacturer who receives an emailed purchase order for a container of widgets that must be placed on a slow boat to China?

While the Internet is the perfect purveyor of instant gratification – Facebook, Twitter, Flicker, and so forth – how well can this electronic medium memorialize a legally enforceable contract? Must our manufacturer commit arborcide to have an ink-and-paper contract before she can confidently part with her precious widgets? Will the delay created by snail-mail delivery of the inked contract deprive the slow boat of its container of widgets? Can our manufacturer go to court to enforce the emailed contract if the buyer decides to reject or fails to pay for the widgets?

Granting a stay of execution of untold numbers of trees, Georgia became the 47th state to implement the Uniform Electronic Transactions Act. This law went into effect on July 1, 2009. The Act is codified at O.C.G.A. § 10-12-1, et seq. Under the Act, a record or signature cannot be denied enforceability just because it’s not on paper. In fact, subject to the laying of an evidentiary foundation, and with a few notable exceptions, most electronic records will have the same validity as a paper counterpart in our courts of law. But, a careful study of the act is merited because it does affect how contracts should be drafted henceforth.

A few major points bear consideration:

First, the concept of an “electronic” record is surprisingly broad. The Act defines “electronic” as “analog, digital, electronic, magnetic, mechanical, optical, chemical, electromagnetic, electromechanical, electrochemical, or other similar means.” O.C.G.A. § 10-12-3(1). A “record” is defined as any “information created, transmitted, received, or stored either in human perceivable form or in a form that is retrievable in human perceivable form.” O.C.G.A. § 10-12-3(5).

Second, a record provided electronically will satisfy any legal requirement that the record be a traditional writing. However, the electronic record will not satisfy the writing requirement if the sender somehow restricts the recipient’s ability to print or store the information. O.C.G.A. § 10-12-8(a).

Third, some notable exceptions to the types of documents that may be in the form of an electronic record are wills, testamentary trusts, advance directives (e.g., a living will, or a health-care power of attorney) or instruments of title that are only valid in the hands of the person asserting ownership. O.C.G.A. § 10-12-4 (i)(3).

In sum, under the Act, electronic bytes may combine to create a fax, an email, or a computer file that can now memorialize a legal right or obligation that can be taken to court and that can be enforced. Therefore, to the uninitiated, a large number of communications and information can have possibly unexpected and unprecedented legal significance.

In other words, the Act can “byte” the hand that feeds it.

When drafting contracts in which traditional methods of paper notice are still desired – such as a default provision requiring notice be sent by conventional means such as certified mail or statutory overnight delivery – special care should be devoted to opting out of the Act. (and the Act promotes freedom of contracting out of its provisions.)

The potential trap in this regard can be found in O.C.G.A. § 10-12-8(a), which provides that “[i]f parties have agreed to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver information in writing to another person, the requirement shall be satisfied if the information is provided, sent, or delivered, as the case may be, in an electronic record capable of retention by the recipient at the time of receipt.” This section presents the issue of how the parties might “agree to conduct a transaction by electronic means.” Can a stream of emails or faxes create the implied term through conduct or mutual deviation from an express term that the parties have agreed to transmit all communications and notices by such means?

To clarify this issue anyone drafting any contract should take pains to include terms that negate any ambiguity. When the circumstances merit a high degree of gravity and solemnity the parties should craft notice provisions that are guaranteed to provide (a) the best possible notice (i.e., email and certified mail) and (b) the best possible proof that notice was sent. A notice of default simply should not be allowed to be transmitted to a single email address.

By contracting via email or fax, our widget manufacturer should now be able to place her container of widgets on a boat headed for the Orient with confidence that her legal rights will be protected – and with the same ease with which she updates her Facebook page. However, this new tool of commerce is not without its risks. The widget manufacturer needs to take measures to remain “current” on new legal concepts to avoid an undesirable and unexpected electronic “byte.”