It’s no secret, legal electronic signatures are what keeps business documentation flows functional even during the physically distanced COVID-19 situation. No more printing, physically signing, scanning and hand-delivering contracts. It shrinks document approval processes from weeks to just minutes and also makes it so much easier to track, manage and store. But, the real question is – are electronic signatures legally binding in all 50 US states?
The short answer is ‘yes, absolutely’. The ESIGN Act (Electronic Signatures in Global and National Commerce) is one of the esignature law (s) that assures it.
According to the act, an electronic signature is defined as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”
This act ensures that:
However, 17 years later, most businesses still do not understand the legality of electronic signatures. During consultations, our clients frequently ask us how they can ensure their electronically signed documents hold up in a court of law.
This blog will help you better understand what it takes for electronic signatures to be legally binding in the U.S.
No. In addition to the ESIGN Act, the Uniform Law Commission drafted UETA (Uniform Electronic Transactions Act) in 1999 to provide a legal framework for electronic signature use per state. It outlines the legalities esignatures relating to everything from transferable records to automated transactions and retention of records.
UETA has been adopted by 48 US states. While Illinois and New York have not adopted UETA, they have implemented similar statutes validating e-signatures.
Here is a snapshot of the e-signature laws applicable to each US state:
ESIGN Act & UETA applies to 48 US states
|Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
Note: The UETA and the ESIGN Act cover business, governmental affairs and e-commerce transactions. But, they do not apply to the likes of wills and marriage, death, birth certificates, codicils and testamentary trusts (as specified under section 103 of the ESIGN act).
Both UETA and ESIGN grant electronic signatures the same legal status as traditional wet ink signatures in the U.S.
For an electronic signature to be legally binding, it must meet the following requirements:
As is the case with traditional wet ink signatures, electronic signatures are valid only if a user demonstrates a clear intent to sign. For example, SignEasy allows users to opt out of electronically signing a document by providing the option to decline signature requests.
The respective parties must either express or imply their consent to do business electronically. Most leading e-signature softwares prompt users to confirm their consent before they sign.
The context and circumstances under which the document was signed can indicate the attribution of an electronic signature. SignEasy ensures proper attribution by providing users a detailed audit trail. This trail goes from the signer’s email ID to the device IP address to the signature timestamp each time they sign a document electronically.
It is critical for electronic signatures to be connected to the document being signed. For example, SignEasy does not allow electronic signatures to be transmitted to anyone except as part of a signed document sent by the signer.
The ESIGN Act ensures the validity of electronic signature records as long as they accurately reflect the agreement and can be reproduced as required. Most leading electronic signature softwares address this by providing a fully-executed signed copy or by allowing them to download a copy of the signed document.
The above-mentioned factors will help you choose a legally binding electronic signature software that suits your needs to a T, with ease.
Adopt electronic signatures and boost your business by signing up for our free trial today!