Overview of electronic signature law and its legality in the United States
About the ‘ESIGN Act’ and UETA
Electronic signatures must abide by national laws around the world which protect eSignature document users within that jurisdiction. In the U.S., the legislation is commonly known as the ESIGN Act and UETA.
Those acronyms stand for:
- The United States Electronic Signatures in Global and National Commerce Act
- The Uniform Electronic Transactions Act
These national eSignature laws describe four critical requirements for recognition of an electronic signature as valid.
United States legal requirements include:
Intent to sign
Like traditional ink signatures, eSigning is only valid if each party to a document intended to sign; this implies a level of comprehension.
Consent to do business electronically
Any parties to an electronically signed transaction must consent to do business this way. Consent is based upon the circumstances of business participant interaction. However, there are exceptional circumstances where consumers are concerned, such that electronic records are used in transactions with consumers only when they have:
- Received a copy of what is known as the UETA Consumer Consent Disclosures
- Actively agreed to use electronic records in any transaction they are involved in
- Not withdrawn their consent to transact electronically
Association of a signature with the record
The document eSigning system used to record any transaction must maintain an associated record that reflects the process by which a signature was created. Alternatively, eSignature software should generate a textual or graphic statement, added to the signed record, to explicitly prove that it was executed with an electronic signature.
Retention of records
U.S. electronic signature records must be retainable and be an accurate reproduction, as a reference for anyone entitled to keep that record.
PandaDoc electronic signature software go beyond legal requirements for eSignature documents! You can have the complete confidence of compliance with the ESIGN Act and UETA when using PandaDoc as an electronic signature solution.
Industry-based and specific eSignature regulations
Specific businesses may also have particular eSignature regulations that pertain to their industry. Federal and state regulations can impose additional legal obligations beyond the general U.S. laws we’ve already outlined.
US life sciences regulations (21 CFR Part II)
An example of an industry-specific eSignature law is the 21 CFR Part 11 (“Part 11”). These eSigned document requirements pertain to the FDA. According to these regulations, electronic recording systems should:
- Be independently validated. Validation ensures accuracy, reliability, consistency of practice. Validation also eliminates risks of altered records.
- Be capable of generating complete and accurate copies of documents in formats that can be easily read by humans as well as formats suitable for FDA inspection, review, and copying.
- Ensure records are securely held and transferred.
- Limit access to authorized parties.
- Use secure, computer-generated, time-stamped audit trails. These independently date and time stamp entries, modifications, or deleted e-documents.
Ensure your eSigned documents meet industry regulations by choosing PandaDoc.
History of U.S. eSignature Law
The ESIGN Act is a federal law, signed in 2000. This milestone legislation recognizes the significance of electronic transactions and updates many commerce-related regulations. It specifically identified the importance and legitimacy of electronic signatures and records, assuming contract participants agree to use electronic documents and eSigning.
UETA was a forerunner of the ESIGN Act. Introduced in 1999, this was adopted by 47 states, the District of Columbia and the U.S. Virgin Islands. The key provision of UETA is that when a law requires a document or a signature, an electronic record or an eSignature is valid when transacting parties agree to proceed electronically.
UETA and the ESIGN Act consolidated the legitimate use of electronic records and eSignature documents for commercial activities. Electronic records and eSignatures now carry the same weight of the law and have legal parity with traditional paper documents and handwritten signatures.
Both laws preserve the following assumptions:
- No contract, signature, or record can be denied legal impact just because it is in electronic format.
- Any e-contract associated with a transaction cannot be denied legal impact purely because an electronic signature or record was used during the process of transacting.
International laws about e-documents and signatures vary around the world and businesses transacting overseas should always seek legal advice. Localized laws covering electronic signatures may refer to particular industries, types of documents, or document categories for which electronic signatures are not appropriate.
Examples where national differences may apply could be:
- Wills and trusts;
- Powers of attorney;
- Divorce proceedings;
- Declarations given under oath.
PandaDoc recommends clients to always seek legal counsel when undertaking transactions across jurisdictions. We can, however, guarantee that all U.S. based transactions will always be legally compliant.