Electronic Signatures Legislation

The House and Senate have passed and the President has signed legislation which essentially pre-empts state laws to provide for the validity and enforceability of inter-state contracts which use electronic signatures and "records." Electronic records simply means a contract or other record which is created, generated, sent, communicated, received, or stored by electronic means.

The legislation includes a provision which specifically states that transferrable records "relates to a loan secured by real property." In addition, the bill provides that notarization requirements are met if an electronic notarization, together with all other information required to be included by statute, regulation or rule of law, is attached to or "logically associated with the signature or record." In addition, the legislation gives those in control of electronic records the same rights as holders in due course under the Uniform Commercial Code, which will facilitate efficiencies in mortgage origination and sale processes.

Consumer disclosures can be provided electronically if the consumer consents to the process, or confirms his or her consent electronically, and is notified of the hardware and software requirements for access to and retention of the electronic records and any fee charges that might be applicable for paper copies. Consumers must be notified if a change in the hardware or software requirements needed to access records creates a material risk that they would not be able to access records. Default, acceleration, foreclosure and eviction notices would still have to be provided in paper form.

Pennsylvania Expands Scope Of Non-Compete Agreements

Many businesses use restrictive covenants (either confidentiality agreements or non-compete agreements) to maintain a competitive advantage in the marketplace by preventing certain third parties from competing for their business. or more than one hundred years, Pennsylvania courts have limited non-compete agreements to two circumstances, where the agreement is ancillary to employment, and where it is ancillary to the sale of a business. However, a recent decision of the Superior Court of Pennsylvania suggests that a non-compete clause may be enforceable in other contractual situations, such as franchise agreements, agency relationships or joint ventures. Non-compete agreements and confidentiality agreements can help a business by protecting customer relationships, trade secrets and other non-public information, as long as the agreements are carefully drafted so as to pass judicial muster.

In order to be deemed enforceable by a Pennsylvania Court, a non-compete agreement must meet the following criteria, it must be (1) ancillary to the main purpose of a lawful transaction (such as employment, sale of a business, or creation of a joint venture); (2) necessary to protect a party’s legitimate interest; (3) supported by adequate consideration; and (4) appropriately limited as to time and as to territory.