More and more businesses are going paperless and automating workflow by incorporating electronic signatures into their approval processes. However, one question we’re often asked in reference to our SignHere solution is “are signatures captured electronically legally binding?” The answer is an unequivocal “yes.”
Electronic Signature Law in the United States
With the adoption of the Uniform Electronic Transactions Act (UETA) and the passing of the Electronic Signatures in Global and National Commerce Act (ESIGN) in 2000, documents including but not limited to records, contracts and transaction receipts can now legally use electronic signatures in commerce.
UETA and ESIGN establish that digital signatures carry the same legal effect as traditional handwritten signatures. Specifically, “a document or signature cannot be denied legal effect or enforceability solely because it is in electronic form.”
Important Notes on Electronic Signature Law
Intent to Sign: like with any hand-written signature, electronic signature laws state that a signature is only valid if the signer has intent to sign.
Signature Associated with the Record: In order to qualify as an electronic signature under UETA and ESIGN, the signature capture software must either:
- Keep a corresponding record reflecting the process by which the signature was captured, or
- Create a textual or graphic statement that is added to the signed record, reflecting the fact it was executed with an electronic signature.
Consumer Protection: Consumers receive special protection under UETA and ESIGN laws.
Electronic records may be used by consumers only if he or she:
- Receives certain disclosures (UETA Consumer Consent Disclosures);
- Has affirmatively consented to use electronic records for the transaction; and
- Has not withdrawn such consent.
Record Retention: UETA asserts that electronic signature records must be:
- Capable of being retained; and
- Capable of being accurately reproduced for later reference by all parties or persons who are entitled to retain the contract or other record