Since man figured out how to put pen to paper, a person’s signature has carried significant weight. Whether it is on legal documents or on a bill for dinner, the signature conveys a message to the world that you agree to the terms listed out above. While the world continues to move further way from using ink and pad, a person’s almighty signature maintains its importance in the digital age.
Regulation regarding electronic signatures started to surface in the United States in the mid-1990s. By 1996, several States began to take note of the need for electronic signature regulation and started passing legislation to address the issue. This eventually gained traction nationally, leading to the passage of both the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA).
ESIGN and the UETA
In the year 2000, Congress passed ESIGN to ensure the validity and legal effect of contracts entered into electronically. Before ESIGN was enacted, there was some skepticism about the validity of electronic records and electronic signatures. To calm the masses, ENSIGN was designed to ensure that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”
The UETA works in tandem with ESIGN. Both were enacted to help ensure the validity of electronic contracts and the defensibility of electronic signatures. While ESIGN revolves mainly around contracts within foreign and interstate commerce, UETA focuses solely on electronic contracts related to “business, commercial, and governmental matters.”
The objective of both Acts is to make sure that transactions in the electronic marketplace are enforceable in the same manner as transactions memorialized on paper. The Act gives the electronic record and electronic signature of a transaction the same weight and legal effect as a paper record. However, in order for electronic signatures to be valid, certain requirements must be satisfied.
Four Major Requirements for an Electronic Signature
All states recognize the legal significance of an electronic signature, either through UETA or a State passed legislation. Whether under the UETA, a state legislation, or ESIGN, in order for an electronic signature to be recognized as valid in the United States, the following requirements are necessary:
- Intent to Sign - Like traditional ink signatures, electronic signature are valid only if each party intended to sign.
- Consent to Do Business Electronically - Recognition of electronic signatures and records is legal only if all parties choose to use electronic documents and to sign them electronically. Electronic records may be used in transactions with consumers only when the consumer has: (i) received consent disclosures; (ii) affirmatively agreed to use electronic records for the transaction; and (iii) has not withdrawn such consent.
- Association of Signature with the Record - The system used to capture an electronic signature must keep an associated record that reflects the process by which the signature was created, or generate a textual or graphic statement proving that it was executed with an electronic signature.
- Record Retention - Electronic signature records must be capable of retention and accurate reproduction for reference by all parties or persons entitled to retain the contract or record.
Doing business through the internet is not a passing fad. People all around the world rely on electronic signatures to make sure that the business that they conduct online is secure and legally binding. Whether you purchase something from a local online company or are doing business with a foreign nation, the UETA and ESIGN allow consumers and companies to conduct electronic business without fear of the validity of the electronic signatures binding each party.