It’s no secret that valid electronic signatures are essential to keeping business documentation flows operationally even in the case of a COVID-19 circumstance where parties are physically separated. There will be no more printing, physically signing paperwork, scanning documents, or hand-delivering contracts in the future. In addition to shortening document approval processes from weeks to minutes, it also makes tracking, managing, and storing documents considerably simpler. However, the main question is whether electronic signatures are legally binding in all 50 states in the United States. To summarise, the answer is ‘definitely, yeah.’ The ESIGN Act (Electronic Signatures in Global and National Commerce) is one of the signature laws (or laws governing electronic signatures) that ensures this.
What is the ESIGN Act?
The ESIGN Act, passed by the United States Congress in 2000, made it easier for people to use electronic signatures, ushering in a new era of document streamlining throughout the United States where federal legislation is in effect. The act defines an electronic signature as “an electronic sound, symbol, or procedure that is attached to or logically related with a contract or other record, and that is completed or adopted by a person with the purpose to sign the record,” among other things. This legislation assures that:
eSignatures have the potential to be used as evidence in a court of law.
eSignatures are a legally valid alternative to traditional wet signatures.
It is not contested that electronic documents have the same impact, validity, and enforceability as paper documents.
However, even 17 years after the invention of electronic signatures, the majority of firms are still unsure about their legitimacy. During consultations, our clients regularly inquire about how they may assure that their electronically signed documents will be recognized in a court of law. This blog will assist you in better understanding what it takes for electronic signatures to be recognized as legally binding in the United States of America.
Is ESIGN Act the only enforceable electronic signature regulation in the U.S?
No. In addition to the ESIGN Act, the Uniform Law Commission established the UETA (Uniform Electronic Transactions Act) in 1999 to offer a legal foundation for the use of electronic signatures in each state’s legal system. It provides an overview of the laws signatures relating to anything from transferrable records to automated transactions and record keeping. UETA has been implemented by 48 states in the United States. While Illinois and New York have not embraced the Uniform Electronic Transactions Act (UETA), they have developed statutes that are similar to UETA and validate e-signatures. Here is a snapshot of the e-signature laws that are now in effect in each state in the United States: The ESIGN Act and the Uniform Electronic Transactions Act (UETA) apply to 48 states in the United States.
North Carolina, North Dakota; Ohio; Oklahoma; Oregon; Pennsylvania; Rhode Island; South Carolina; South Dakota; Tennessee; Texas; Utah; Vermont; Virginia; Washington; West Virginia Other states have e-signature legislation: Illinois (Law 5 ILCS 175/1-101), New York (Electronic Signatures and Records Act), and others (ESRA)
Obtain a copy of The Complete Guide on Electronic Signature Laws Throughout the World by email.
Some types of eSignatures, according to Illinois’ Electronic Signature Law 5 ILCS 175/1-101, which was also passed in 1999, are considered more secure than others. Some of the characteristics of eSignatures include the following:
It is agreed upon by both parties that the signature has a “secure nature.” The signature is applied by both parties in a verifiable manner.
Created in a way that can be considered commercially acceptable Can be depended on by all parties in a fair and reasonable manner
As a result of the Electronic Signatures and Records Act (ESRA), which was enacted in 2000, electronic signatures are considered to be as legally binding as traditional wet signatures in New York. An ESRA best practices guide is also available for individuals who wish to utilize eSignatures following the rules and regulations of the organization.
Note: The Uniform Electronic Activities Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESIGN Act) cover commercial, government affairs, and e-commerce transactions. However, they do not apply to documents like wills, marriage certificates, death certificates, birth certificates, codicils, and testamentary trusts (as specified under section 103 of the ESIGN act).
What do the ESIGN Act and UETA imply?
In the United States, both the UETA and the ESIGN treat electronic signatures as having the same legal standing as traditional wet ink signatures. These are the acts:
Establish that an electronic signature can be used to satisfy the requirements of any law that requires a signature.
Obtain permission for electronically completed agreements to be used as evidence in court proceedings.
It is important to avoid denial of the validity or enforceability of an electronically signed document only based on the fact that it is in electronic form.
How to ensure that your documents are legally compliant in the US?
An electronic signature must meet the following standards to be considered legally binding:
I Intent to sign as well as an opt-out provision
Electronic signatures, like traditional wet ink signatures, are only valid if the user indicates that he or she intends to sign the document before signing it. SignEasy, for example, provides users with the option to deny signature requests, allowing them to opt-out of the electronic signing of a document entirely.
(ii) Consent to transact business in an electronic format
Consent to signing a document
The respective parties must either express or imply their agreement to conduct business electronically before the transaction can proceed. Most popular e-signature software prompts users to affirm their consent before allowing them to sign the document.
(iii) Acknowledgement of signatures in a clear manner
The context and circumstances in which a document was signed can provide clues as to whether or not it was signed using an electronic signature. A thorough audit trail, provided by SignEasy, ensures that proper attribution is maintained. The trail starts with the signer’s email ID and continues through their device’s IP address and the signature timestamp each time they electronically sign an agreement.
(iv) The connection between the signature and the record
If an electronic signature is to be effective, it must be associated with the document being signed. For example, SignEasy does not enable electronic signatures to be transmitted to anyone unless they are included in a signed document that has been delivered by the signer themselves.
(v) Retention of records
While the ESIGN Act does not guarantee the validity of electronic signing records, it does ensure that they accurately reflect the agreement and may be duplicated if necessary. This is addressed by the majority of top electronic signature software packages, which either provide a fully-executed signed copy of the document or allow them to download a copy of the signed document. All of the variables listed above will assist you in making an informed decision about legally binding electronic signature software that will meet your requirements for the letter. Sign up for our free trial today to learn how you can use electronic signatures to improve your business.