Your “John Hancock” Takes on a Whole New Meaning
Under the Arizona Electronic Transactions Act, an electronic signature satisfies any law that requires a signature. The statutory definition of “electronic signature” is broad, encompassing “an electronic sound, symbol or process that is attached to or logically associated with a record and that is executed or adopted by an individual with the intent to sign the record.” Recently, the Court of Appeals had the opportunity to address whether an e-mail communication qualifies as an electronic signature.
In Young v. Rose, decided Sept. 25, 2012, the issue was whether e-mail correspondence should be deemed an electronic signature to create a signed, binding real estate commission agreement.
On January 11, 2009, Young sent an e-mail message to Jordan Rose regarding four properties possessing some of the Roses’ “wish list” amenities. The e-mail inquired whether Jordan wanted Young to preview the properties and provide additional information. Jordan responded by e-mail the next day asking Young to “keep us posted” regarding two of the properties “if the prices drop.” Later that same day, Young e-mailed Jordan to say that the price of one property had decreased to $4.475 million, and the owner would consider offers under $4 million. Young also asked Jordan to sign a new Buyer–Broker Agreement because they were “back into the exploration mode.” Young attached a portable document format (PDF) version of the agreement to her e-mail message. Jordan forwarded that e-mail message to her assistant with the direction to “pls print and have us sign and get back to Julie.” On January 14, 2009, Jordan’s assistant sent an e-mail message to Young, apologizing for the “delay” and attaching “the signed agreement.” The next day, Young e-mailed Jordan’s assistant, saying simply, “Thank you.”
All of Jordan’s e-mail messages to Young included an electronic business card with Jordan’s name, firm logo, address, telephone numbers, and website addresses. Similarly, all of Young’s e-mail messages ended with an electronic business card consisting of her name, business address, e-mail address, telephone numbers, website address, and photograph.
The 2009 Agreement identifies “Jason Rose, Jordan Rose” as the buyers and Realty Executives as the broker, with Young as its agent. The agreement authorizes Realty Executives to act as the Roses’ exclusive broker from January 12, 2009, through July 12, 2009, in their efforts to locate a “lot or home in [zip codes] 85018 or 85253.” The Buyers, Jordan and Jason Rose, each hand-signed the 2009 Agreement. The Broker, Young, did not manually sign the agreement, as is required under Arizona law in order to have a binding real estate commission agreement.
During the term of the 2009 Agreement, the Roses purchased a home within the 85253 zip code, using a real estate agent other than Young. The Roses paid that agent a commission. Young thereafter sued the Roses for breach of contract, seeking to recover the commission set forth in the 2009 Agreement.
The trial court granted summary judgment in favor of the Roses, finding that Young did not sign the agreement electronically as a matter of law. The Court of Appeals reversed the trial court’s ruling. The Court of Appeals determined that the trial court record was not fully developed to allow a ruling on the issue, and remanded back to the trial court to more fully develop that record.
The importance of the Young case is that one could unknowingly bind oneself to a contract by simply corresponding by e-mail, so long as it is established that the parties agreed to conduct a transaction by electronic means. With so many agreements today being negotiated and prepared through electronic means, one could be deemed to have electronically signed an agreement based on the content of e-mail correspondence, whether one actually signs the agreement or not, if the e-mail seems to indicate an intent to be bound. YIKES!