The good news is that e-signatures are legally binding. In fact, they are just as binding on a contract or other type of document as a handwritten signature; however, they must adhere to certain guidelines. Let’s delve more into what an e-signature is and why it’s legal.
What is an e-signature and what makes it legal?
An e-signature or electronic signature is data – a symbol, sound or something else – in electronic form that is used by a signatory (signer) to represent his or her signature. Different countries have standards for e-signatures which users must adhere to for the signatures to be valid and legally binding.
In the U.S., e-signatures are both legalized and regulated under two separate laws, the United States Electronic Signatures in Global and National Commerce (ESIGN) Act which passed in 2000 and the Uniform Electronic Transactions Act (UETA) which makes e-signatures uniform and valid across state lines. UETA has been passed in all 47 states, plus Washington, D.C. and the U.S. Virgin Islands. The three states which have not passed it – New York, Illinois and Washington – have their own laws regulating e-signatures.
Four basic elements of a valid e-signature in the U.S.
There are some minor details which we won’t get into, but in the U.S., an e-signature must basically possess four main attributes in order to be valid and legally binding:
- The signer must be aware of their actions and their intent to sign.
- The signer must have given their consent indicating they agreed to allow the transaction to take place electronically.
- The electronic system or software that captured the signature must also keep a record of the process used to obtain the signature.
- The documents that were e-signed must be retainable for recordkeeping purposes and reproducible so that all parties can have a copy.
What kinds of documents use e-signatures?
The use of e-signatures is mainstream and there are numerous e-signing applications available, both software- and web-based. You may have heard of some of the more popular ones like DocuSign, ESignLive and PDCflow.
While e-signatures don’t have complete adoption, they are very common on certain types of documents. If you’ve filed your taxes online, for instance, you’ve probably e-signed them.
Here are a few of the other types of documents where e-signing is widely used:
- Supplier contracts and agreements
- Confidentiality and non-disclosure agreements
- Human resources forms
- Health care enrollment forms
- Public petitions
- Online Contracts
- Mortgage Loan Closings
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