Regulations on the legality and enforceability of Electronic Signatures: United States

Which laws govern electronic signatures in the United States?

The U.S. has two laws for digital signatures, the UETA and ESIGN Act. In some states, the laws are very similar, but in others, there are many fine-tuned differences. California has adopted UETA with extensive exclusions for consumer transactions that cover many topics like ticketing and insurance. Illinois and New York have not adopted UETA and are only subject to ESIGN.

In the United States, electronic signatures are usually categorized into two:

Electronic Signature: What distinguishes an electronic signature from a digital signature is that, in many cases, an electronic signature is generated and stored electronically without being recorded on paper. Electronic signatures come in lots of different forms. They use another authentication method to verify the signer’s identity, like email, a company I.D., password protection, or a PIN sent to your phone. A secured process is then used to verify the signing and proof of the signing. A final tamper-evident digital certificate is included in the completed document.

Digital Signature: A digital signature is generated using a digital certificate from a TSP, such as a certificate authority, to verify the document’s signer. The digital certificates are used to bind the signatures to the documents that they validate through encryption.

It’s important that you understand electronic signatures in the United States. This manual is intended to offer general knowledge concerning them, so the reader can decide whether they want to learn more and seek professional legal advice. Laws about electronic signatures are constantly changing, so this guide is not a substitute for professional legal advice.

Will an electronic signature be valid in all states?

Yes, electronic signatures have the same legal status as handwritten ones. The use of these types of signatures is valid in all states in the U.S. In other industrial countries, electronic signatures are granted the same level of legitimacy and efficiency as handwritten signatures and paper documents.

A digital signature is typically needed in the United States to create a legally binding document. For those cases where additional authentication is required in the U.S. (such as certain transactions in regulated industries like life sciences), such as MSB Docs standards-based signatures, a digital signature can be used to sign a document. This also applies to regions such as the European Union, where digital signatures are more prevalent.

What are the requirements for an electronic signature in the United States?

ESIGN and UETA define an electronic signature the same way — any electronic sound, symbol, or process connected to or logically linked with a record and conducted or adopted by an individual intending to sign it.

What are the documents that may be signed electronically?

A digital signature is a much faster, simpler way to get things done. You can use it for business transactions or personal matters. Your electronic document is enforceable in industrialized countries around the world, including:

• Real Estate
• Human Resources
• Procurement
• Insurance
• NDAs
• Software licensing
• Education
• Life Sciences
• High Tech
• Consumer transactions (excluding certain post-default notices and excluding non-uniform exemptions in California’s UETA)

While electronic signatures can be legal for the following transactions, individual transactions within the transaction type may not always be legally allowed to proceed as an electronic signature. Additional considerations should be made for each specific type of transaction, and careful consideration should be exercised before proceeding with this option. Examples of potential transactions that may require additional consideration:

• Documents to be recorded

  Registration is done on a county-by-county basis in the U.S. This means that the county in which a document is recorded may not be able to accept electronically recorded documents.

• Healthcare

  Records from the United States Food and Drug Administration pertaining to clinical trials.

• Corporate organizational documents and resolutions

  In some states, any documents that are used to form the corporation may be excluded or subject to special laws.

• Banking

  Article 4A of the UCC (also known as a wire transfer).

• Insurance

  Insurance companies must follow state regulations and abide by special requirements and exceptions. In addition, ESIGN and some state UETA agreements exempt documentation related to the termination of coverage.

• Lending

  Negotiable promissory notes are governed by special laws, some of which can be found in Section 5. Letters of credit are governed by Article 5 of the UCC. UETA states, as noted in Section 5, exclude notices of default or foreclosure under mortgages or leases from electronic delivery.

• Procurement

  Electronically created equivalents of bills of lading and warehouse receipts according to the UCC.

• Real Estate

  Negotiable promissory notes secured by the real property must meet specific requirements under the ESIGN and UETA laws.

• Government Filings

  Under ESIGN, you may use electronic records in your dealings with government agencies once authorized by the agency. For example, the IRS has set standards for various forms and reports.

• Documents that need notarization

  As of April 2021, over 30 states allow online remote notarization. ESIGN and UETA provide the authority for an email to be considered a legal notarization. However, other state notarial laws may not allow this.

Do parties need to consent to use electronic signatures in U.S. law?

Yes. The Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA) say that parties cannot be required to use electronic records and signatures. Consent does not need to be expressed but can manifest through a transaction’s circumstances.

Suppose a customer needs information that must be provided “in writing,” and the consumer has given consent to receive those documents electronically. In that case, he or she must be provided with ESIGN and state UETA-compliant consent disclosures. Once they have reviewed these disclosures and have given consent, they cannot later withdraw this consent without being penalized by the state.

Consumers must consent electronically or otherwise affirmatively consent, in a way that reasonably exhibits the consumer can access details in the electronic format to which consent is being given.

Are electronic signatures barred for any transactions?

eSignatures are prohibited for the following transactions:

• Wills or testamentary trusts
• Documents related to family matters, particularly adoption, divorce, and other legal situations.
• Court documents must be executed as part of an ongoing court proceeding or legal proceedings.
• Notice of utility termination, default or foreclosure under mortgage or lease, health or life insurance termination, and product recall and safety notices.
• Notices of transport or handling of dangerous materials, pesticides, or other toxic chemicals.
• Certified Securities

What factors led to the enforcement of digital signatures in the United Kingdom?

Electronic signatures are as binding in court as physical signatures, and neither can be denied legal standing based solely on their type. However, if anyone challenges the validity of your electronic signature, you’ll need to demonstrate that the signer had the intention of signing it; (ii) the electronic signature is attributed to the signer (whatever the appropriate process for them is), (iii) and it is attached, or logically linked with, the document being signed; (iv) the signer has to be allowed to keep a copy of the signed document, (v) and the signed document must be preserved safely and securely.

To safeguard against fraudulent activities in digital signoffs, maintain an audit log associated with the signing session. That way, in the case of a dispute, it can be established that the digital signature was attributed to the signer.

*Disclaimer: This page is intended to provide general information without any risks associated with legal advice. Though this page may contain some general legal information, it should not be used as an alternate for legal advice in your jurisdiction. You should always consult with an attorney or other professional before making any decisions on your own. MSB Docs provides this material “as-is,” and they disclaim any responsibility regarding its use. MSB Docs makes no representation or warranty of any kind, including guarantees or warranties of merchantability, fitness for a particular purpose, or accuracy of this material.