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However, E-Sign and UETA both provide that all parties must consent to doing business electronically. The Electronic Signatures in Global and National Commerce Act (E-Sign), which is largely based on the Uniform Electronic Transactions Act (UETA), provides that a contract relating to interstate commerce may not be denied legal effect solely because an electronic signature or record was used in its formation.Į-records and e-signatures have the same legal effect as paper contracts and handwritten signatures, subject to specific exceptions not applicable in this context. The electronic issuance of surety bonds meets the legal standards for the historic wet signature and notary requirements.
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The Legal Environment Uniform Electronic Transactions Act While a few states did adopt acceptance of electronic bid bonds through the state departments of transportation, acceptance was not widespread beyond those state departments. The whitepaper (available at ) was intended to establish common parameters for all public owners in the electronic procurement and bonding process. With the assistance of construction industry stakeholder organizations, this joint initiative between NASBP and SFAA created an educational best practices whitepaper, “eProcurement Bidding/Bonding Guidelines,” to assist public owners with implementing electronic procurement methodologies and system characteristics that respect the interests of all parties. Nearly 20 years ago, the surety industry recognized the need to eventually transition from submitting paper bonds with wet signatures to electronic bonds by creating a joint initiative, focused on electronic bidding and bonding. To date, no issues have arisen with the enforcement of electronic bonds in these sectors. Commercial surety bonds, for example, have been submitted electronically for years in the form of mortgage broker and customs bonds. Executing Surety Bonds ElectronicallyĮxecuting surety bonds electronically is not a new practice. Adherence to such practices also is less efficient and is simply an outdated practice, as the advent of technologies and legal authority permitting execution and delivery of electronic bonds with digital signatures and seals is here and equally enforceable. In short, the current practices required by most public owners of executing physical copies of bonds is unworkable and imprudent during the COVID-19 crisis in order to maintain a safe environment for those executing, delivering and receiving surety bonds. Because this practice requires the close, physical presence and proximity of multiple persons, including a public notary, it runs afoul of social distancing and stay-at-home orders, in addition to needlessly endangering human health. In most jurisdictions, in practice, a surety bond is accepted as fully executed by most governmental authorities when it includes a wet signature, a raised corporate seal and notarization. When state governors began to issue stay-at-home and/or social distancing orders earlier this year, the surety industry was confronted with adhering to these orders while attempting to meet the traditional federal, state and local requirements surrounding the acceptability of surety bonds. businesses to become more flexible with the way they operate and conduct business.
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The COVID-19 pandemic has forced many U.S.