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The ESIGN act states that an electronic signature is “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.”
In 2000, the U.S. government passed the ESIGN Act to ease the adoption of electronic signatures, ushering in a new era of document streamlining in all US locations where federal law applies. According to the act, an electronic signature is “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:
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. 48 US states have adopted UETA. While Illinois and New York have not adopted UETA, they have implemented similar statutes validating e-signatures. In the United States, the Uniform Electronic Transactions Act (UETA) 1999 and the Electronic Signatures in Global and National Commerce Act (ESIGN) 2000 admit the validity and enforceability of electronic signatures.
The UETA and the ESIGN Act cover commercial transactions and therefore do not pertain to records used unilaterally or which do not relate to business, commercial (including consumer), or governmental affairs. They also specify exemptions to the use of electronic signatures in certain documents, such as those relating to the creation and execution of wills, adoption, divorce, or other matters of family law. Please review the list of exemptions under section 103 of the ESIGN act, and consult with legal counsel to identify relevant exclusion categories.
As 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 express or imply their consent to do business electronically. Most leading e-signature software prompts 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 with 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.
An electronic signature must be connected or associated with the document being signed by indicating a process by which the signature was created or by creating a graphical or textual statement, which gets added to the signed record. 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.
An electronically signed document must be in the form of an electronic record capable of retention by the recipient at the time of receipt. The sender or the information processing system must not inhibit the ability of the recipient to print or store the electronic record for later reference.
Both the UETA and ESIGN ACT laws explicitly provide that “a signature, contract, or other record relating to such [commercial] transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form."
An electronic signature is an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person intending to sign the record.
The acts establish the general rule that electronic signatures are valid and enforceable, provided certain requirements are established. The legal admissibility of electronic signatures is well-established in the United States. To ensure that the electronic document can be authenticated and admitted as evidence, it is important to maintain an audit trail that logs the actions taken by the parties electronically signing documents.
The ESIGN Act offers numerous benefits for individuals and organizations seeking to embrace electronic signatures. Firstly, it enhances efficiency by streamlining document signing processes, eliminating the need for physical paperwork and reducing turnaround times. This efficiency leads to significant cost savings by reducing expenses associated with printing, paper, postage, and document storage. Additionally, electronic signatures provide convenience and accessibility, allowing individuals to sign documents from anywhere at any time using various devices. They also offer enhanced security measures, such as encryption and authentication, ensuring the integrity and non-repudiation of signed documents. However, it is important to be aware of the limitations and exceptions of the ESIGN Act. Certain types of documents may be excluded from its scope, and specific industries may have additional compliance obligations. Compliance with consent and disclosure requirements is also crucial for maintaining the enforceability of electronic signatures. Nevertheless, by understanding and adhering to the ESIGN Act's provisions, businesses can fully leverage the benefits of electronic signatures while ensuring legal validity and reliability.
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).