eSignature Legality
in The United States
In the United States of America, ESIGN Act and UETA have strengthened legislation surrounding e-signatures and electronic documents. Both these Acts ensure that electronic signatures and documents are are given the same legal status as physical documents and signatures in terms of acceptance, validity, and enforceability. The need for electronic signature emerged with the development of the e-commerce sphere and the fears over the vulnerability and protection of electronic contracts. The Uniform Electronic Transactions Act, 1999 (UETA) at a state level, and the Electronic Signatures in Global and National Commerce Act of 2000 (ESIGN Act) at a federal level, govern and provide legislation that aid in making electronic contracts and electronic signatures valid, admissible and enforceable.
The Uniform Electronic Transactions Act (UETA) was passed by the NCCUSL in 1999. UETA is enacted at the state level and today, 48 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have implemented the UETA.
The ESIGN Act defines the term Electronic Signature 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 also specifies that that no information shall be denied legal validity, or admissibility solely due to its electronic nature. This Act has been successful in holding electronic agreements and e-signatures legally effective and enforceable in law.
The prerequisites for e-signature to be legally effective under both the Acts are:
Intent to sign
Signatories their intention to enter into such agreement and sign the agreement electronically.
The intention of the Parties is considered to be displayed in the following circumstances:
- When the Party signs the Agreement using their mouse, stylus, inserting their signature or selecting a signature format.
- When the Party clicks on a checkbox or accepts the “I Accept/ Accept” button for accepting consumer disclosure form
- When the Party provides relevant details that assist in identifying them, like their name.
Consent to do business electronically
The contracting parties must clearly consent to conduct their transaction electronically. The Agreement between the Parties can include such consents in form of a standard or customized clause to capture the same.
Under UETA, evidence of customer consent to transact electronically can be submitted by:
- The customer providing a signed copy of the UETA Customer Consent Disclosure.
- Presenting proof that the customer agreed to conduct the transaction through the use of an electronic document.
- Presenting proof that the customer did not withdraw their consent to conducting business electronically.
Opt-out clause
The contracting parties must have an option to determine whether or not they are willing to sign the agreement electronically. If they choose not to, they must be provided with an option to opt out. If the Party opts out, an alternative to manually sign the agreement with instructions to assist them shall be provided.
Signed Copies and Associated records
The Parties to the Agreement shall be provided with the fully executed copies of the Agreement post-execution.
Also, the document e-signing system used by the Parties to record any transaction must maintain an associated record that reflects the process by which signatures were created by the Parties. Alternatively, such software must have mechanisms to generate statement of a textual or graphic nature, added to the signed record, to clearly prove that it was consensually executed by the contracting parties with an electronic signature.
Record Retention
The electronic document containing electronic signature must be stored and be an accurate reproduction, as a reference for anyone entitled to keep a record of such electronic document.
Use cases of electronic signature in USA:
- Commercial agreements
- Purchase orders
- Non-Disclosure Agreements (NDAs)
- Invoices
- Sales agreements
- Order acknowledgments
- Distribution agreements
- Services agreements
- Software license agreements
- Copyright, patent, and trademark licenses
- Employee invention agreements
- Benefits paperwork
- Privacy notices
- Commercial and residential lease agreements
- Consumer agreements
- Service terms
- Consumer credit agreements
- Shipment documents
- Order confirmations
- Software licenses
- User manuals
The COVID-19 pandemic has radically changed our lifestyles and how one conducts business. Most non-essential companies have established completely remote work setups. This “new normal” has concentrated more attention on electronic means of transactions. The “new normal” in the age of Covid-19 proceeds to facilitate the use of eSignatures.
Documents that cannot be e-signed in USA:
- Cancellation of health insurance or life insurance
- Termination of health insurance or life insurance
- Termination of utility services
- Court orders
- Court pleadings
- Court notices
- Eviction, foreclosure, repossession notices
In addition to providing resources on legal framework related to electronic signatures, Certinal offers a legally compliant and user-friendly e-signature application.
DISCLAIMER
Certinal is making available the information and materials in this article for informational purposes only and is meant to help companies understand eSignature’s application in a legal framework. Laws change rapidly and Certinal makes every reasonable effort to keep the content of this article current, hence Certinal makes no claims or representations that the information contained in this article is true, accurate, correct, or current. The law is different from jurisdiction to jurisdiction, and even similar laws may be interpreted differently in different courts or different places. Since these factors differ according to individuals and businesses, Certinal is not liable for any consequence of any action taken by any third party relying on material/ information provided under this article. The contents hereof should not be construed as legal advice in any manner whatsoever. In cases you require any assistance; you must seek independent legal advice.
