{"id":35428,"date":"2016-03-31T19:29:05","date_gmt":"2016-04-01T00:29:05","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/new-e-signature-laws-click-into-action.html"},"modified":"2018-03-30T14:28:20","modified_gmt":"2018-03-30T19:28:20","slug":"new-e-signature-laws-click-into-action","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/law-library\/new-e-signature-laws-click-into-action.html","title":{"rendered":"E-Signature Laws Click Into Action"},"content":{"rendered":"
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The Electronic Signatures in Global and National Commerce Act (ESIGN<\/a>) is a statutory milestone on the road to a nationally consistent legal framework for electronic commerce. It joins the proposed Uniform Electronic Transactions Act (UETA<\/a>), versions of which have been adopted in 47 states.<\/p>\n

ESIGN and UETA apply to transactions among individuals, businesses, and governments; ESIGN only applies to transactions "in or affecting interstate or foreign commerce". Both statutes provide – with numerous exceptions – that electronic contracts, signatures and other transactional records "may not be denied legal effect, validity, or enforceability" solely because they are in electronic form.<\/p>\n

What Is An Electronic Signature?<\/b><\/p>\n

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." As UETA’s official comments make clear, "No specific technology need be used …[T]he critical element is the intention to execute or adopt the sound or symbol or process for the purpose of signing the related record." Consequently a valid electronic signature<\/a> does not need to be an encrypted signature such as those created by PGP or other digital encryption<\/a> programs. It can be a webpage clickthrough ("I ACCEPT"), a sound ("OK!"), typed letters at the bottom of an email message, a fingerprint, a DNA sequence, or something as yet unimagined, so long as it is intended as a signature by the signer. Even the act of a nonhuman electronic agent empowered by a party may be sufficient to bind the party. However, the more stringent and secure the signing process is, the more difficult it will be for the purported signer to deny or evade responsibility.<\/p>\n

Do I Have To Accept Electronic Signing?<\/b><\/p>\n

Neither ESIGN nor UETA force anyone in the private sector to go electronic. It is up to the parties to decide how to transact their business. Section 101(b)(2) of ESIGN<\/a> states, "[t]his title does not … require any person to agree to use or accept electronic records or electronic signatures … ". UETA similarly says, "This Act applies only to transactions between parties each of which has agreed to conduct transactions by electronic means. "<\/p>\n

What Is An Electronic Record?<\/b><\/p>\n

An electronic record is any record created, generated, sent, communicated, received, or stored by electronic means. Electronic is defined as "relating to technology having electrical, digital, wireless, optical, electromagnetic, or similar capabilities. The definition is very broad and demonstrates the scope of consensual transactions the UETA was designed to impact.<\/p>\n

What Implications Does ESIGN Have For Recordkeeping?<\/b><\/p>\n

Under Section 101(c) of ESIGN<\/a>, if a federal or state law or regulation imposes a recordkeeping requirement with respect to a covered transaction, "that requirement is met by retaining an electronic record of the information … that (A) accurately reflects the information set forth in the [original] record; and (B) remains accessible to all persons who are entitled to access … for the [required] period … in a form that is capable of being accurately reproduced for later reference …" This provision applies even if the statute or regulation purports to require retention of the original, which could make a substantial difference in companies’ recordkeeping practices created in response to past governmental requirements. The accuracy requirement, however, presents a variety of authentication and security issues which will require careful planning before roomfuls of paper records go to the shredder.<\/p>\n

What Exceptions Exist?<\/b><\/p>\n

As with many statutes crafted through political compromise, ESIGN is riddled with exceptions and special provisions<\/a>, only a subset of which can be addressed in this Update. Similar exceptions, and others, exist in many state versions of UETA. The principal exceptions to the primary section of ESIGN are:<\/p>\n