The Legality and Enforceability of Digital Signatures in the US

The Legality and Enforceability of Digital Signatures in the US

So you want to adopt e-signatures but you need to be sure that they’re legally enforceable. That’s understandable. After all, agreements aren’t valid until all parties have signed the dotted line. If, say, your business relies on signed forms or contract agreements, then a digital signature needs to be just as valid as its ink counterpart.

Fortunately, many jurisdictions around the world have passed legislation to ensure that e-signatures are legally admissible for business transactions.

One of the earliest legal recognitions of the electronic signature was when the United Nations Commission on International Trade Law (UNCITRAL) published the Model Law on Electronic Commerce (MLEC) in 1996. MLEC outlined a set of internationally accepted rules aimed at removing legal obstacles for electronic commerce, which helped spur the acceptance and development of e-signatures around the world.

What it Means in the United States

In the US, there are two major laws relating to e-signatures in place. At the state level, the Uniform Electronic Transaction Act (UETA) was signed in 1999 to standardize state laws concerning the validity of e-signatures. UETA is adopted by 47 states, along with the District of Columbia, Puerto Rico and the U.S. Virgin Islands. The other states – Illinois, New York, and Washington – have implemented their own local laws that recognize e-signatures for legal usage.

The Electronic Signatures in Global and National Commerce Act (eSign), a similar e-signature law at the federal level, was signed in 2000, to encourage interstate commerce.

Both laws helped lay out the legal framework for electronic signatures. Under ESIGN, a signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” The intent with these laws is clearly to encourage e-signature validity in order to drive more fluid business transactions.

Under both laws, an e-signature is legally recognized if it meets four criteria:

  1. Intent to sign – parties must clearly show intention to sign the document.
  2. Consent to do business electronically – parties must indicate consent to conduct business electronically. For instance, parties may be asked to click an “Accept” button on a clause to do e-business.
  3. Association of signature with the record – when signed electronically, the system used to capture the transaction must keep an associated record that reflects the way the signature was produced, including time and date stamps.
  4. Record retention – a record of the signing must be kept and made reproducible to parties who signed the contract.

The US practices an open-technology approach, meaning there’s no law requiring the usage of a specific signing technology to produce legally binding e-signatures. You can use the e-signature service you’re most comfortable with, which is likely to be the one your company is already using along with your PDF software. If not, be sure to check out Foxit PhantomPDF. We are directly integrated with DocuSign.

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