Are Electronic Signatures Legally Binding In the U.S.?

In the modern world, almost everything has become digital. From the process of online shopping to automating complex business functions, several processes have become digital. Talking about the business processes, an important thing that helps in running business operations is electronic signatures.

That said, when it comes to signing a document on the internet, many people consider the legality of e-signatures. This aspect is important in making a document official and so, most people consider the legal status of a document anytime they sign a document.

In the blog, we will find the answer to a commonly deliberated question which is, “Are Electronic Signatures Legally Binding In the U.S?”

What are Electronic Signatures?

Similar to the inked signature, signing documents on the internet is a way of signing the documents, except for the fact that the e-signatures are pretty multi-dimensional. There are multiple ways in which this can be achieved.

You can use a good electronic signature in word tool that enables you to sign the documents on a digital document. The presence of such a signature on a document might not give it legal status based on various factors that you might read later in the guide.

The legality of the Electronic Signatures:

In the year 2000, the U.S. government passed an act called ESIGN which was meant to simplify the adoption of electronic signatures. This act ushered in an entirely new era of document streamlining in the US locations where federal law is applicable.

According to this act, an electronic signature is known as an electronic sound, process, or symbol that is either attached to or logically associated with a contract or another record. The e-signature must be executed or adopted by a person with a clear intent to sign the record.

The ESIGN Act makes sure that electronic signatures can be used in a court of law as tangible evidence. They are legally viable options such as traditional signatures. In addition, the effect, validity, and enforceability of electronic documents are not denied.

Even after the passing of this law, so many businesses do not understand the legality of electronic signatures. Many people who are doing their business wonder if they can ensure that electronically signed documents can be held up in a court of law.

Is ESIGN Act The Only Enforceable Regulation?

No, the ESIGN Act is not the only enforceable regulation. Other than the ESIGN Act, the UETA or the Uniform Law Commission Act drafted in 1999 offers a legal framework for the use of electronic signatures per state. The UETA Act helps in outlining the legalities of e-signatures relating to almost everything from transferrable records to automated transactions and the retention of records.

The UETA has been officially adopted in many US states and the ones that haven’t adopted this act, have their own e-signature validating regulations. Both the ESIGN Act and the UETA grant electronic signatures the status of conventional or wet ink signatures in the United States.

Both of these acts establish any law with a signature requirement that can be satisfied with the help of an electronic signature. They also help electronically executed agreements to be presented as evidence in court. In addition, they also prevent denial of enforceability or validity of an electronically signed document only because it is in electronic form.

Ensuring Legally Compliant Documents:

To make sure that an electronic signature is legally binding, it is important that the below-mentioned criteria are met. Have a look to know more.

  • Intention to Sign and Opt-Out: Just as traditional wet ink signatures, electronic signatures online are valid only when a user shows a clear intention to sign the document. For example, a good online signature software enables the users to choose out of electronically signing a document by offering an option to decline the signature request.
  • Electronic Business Transaction: The parties involved in a business transaction should consent to do their business electronically. Most of the leading e-signature software applications prompt users to confirm their consent much before they sign the documents.
  • Cause of a Signature: The complete context and circumstance under which a document was signed can indicate the cause behind an electronic signature. A software application ensures the complete attribution of an electronic signature by offering a detailed audit trail. This trail goes from the signer’s email ID to the device’s IP address to the signature timestamp every time they sign a document electronically.
  • Association of Signature With Record: It is important for electronic signatures to be completely connected to the document that is being signed. The documents should not be transmitted to anyone except when they are a part of a signed document sent by the signer.
  • Retaining a Record: The ESIGN Act also ensures the validity of an electronic signature as long as they reflect agreement and also can be reproduced as and when it is needed. Most of the leading electronic signature solutions address this problem by offering a completed signed copy or by allowing them to download a copy of the signed document.

All these factors play an important role in choosing a legally binding electronic signature software application that solves all possible purposes.

Conclusion:

An effective electronic signature solution will not only let you create a document and manage it but will also enable easy management and quick processing of documents. It will offer many searching tools while helping in finding old contracts. There is also a dashboard where you can find all the old contracts and sort them into pending, sent, or active contracts.

In case you are looking to streamline your marketing and sales efforts, then an e-signature solution is right for you.