eSignature Legality in United States

E-Signature Legality Summary

This guide explains the electronic-signature framework in the United States, including the governing laws, legal effect, accepted signature methods, validity requirements, exclusions and practical business uses.

Applicable Laws

the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA), as adopted by applicable states

Legal Status

Electronic records and signatures receive legal recognition in the United States under the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA), as adopted by applicable states. The signing process must also satisfy every document-specific rule on identity, evidence, delivery, retention, witnessing, notarization, registration or filing.

Regulatory Authority

Regulation of Electronic Signatures is governed by the combined requirements of federal and state law and sector-specific regulations.

Legal Recognition (Effect)

Electronic signatures are recognized under the Electronic Signatures in Global and National Commerce Act (ESIGN Act) and the Uniform Electronic Transactions Act (UETA). These laws are aligned with international standards such as the UNCITRAL Model Law on Electronic Commerce.

The ESIGN Act provides that a signature, contract, or other record shall not be denied legal effect, validity, or enforceability solely because it is in electronic form.

Adopted by States: Starting in 1999

The UETA is a model law adopted by 49 states of the United States, the District of Columbia, Puerto Rico, and the US Virgin Islands. It provides a legal framework for electronic transactions, ensuring that electronic records and signatures are treated equivalently to their paper-based counterparts.

These legal frameworks have been instrumental in the widespread adoption of eSignatures across various sectors in the United States, enabling businesses and individuals to conduct transactions efficiently and securely online.

Note: New York remains the only state that has not adopted the Uniform Electronic Transactions Act (UETA). Instead, it implemented its own statute, the Electronic Signatures and Records Act (ESRA), which makes electronic signatures legally binding in the state.

Accepted Types of Electronic Signatures

The United States recognizes a wide range of eSignatures under the ESIGN Act and UETA, from simple eSignatures to more secure digital and biometric signatures. Each type of signature serves different purposes and levels of security, making it essential to choose the appropriate method based on the specific requirements of the transaction.

Here is a detailed overview of the different types of eSignatures accepted in the US:

1. Simple electronic signatures

Simple electronic signatures are the most basic form of eSignature. They involve any electronic method used to signify agreement or consent without specific security measures.

Examples:

• Typed signatures: Typing your name at the end of an email or in an online form
• Click-to-sign: Clicking an "I Agree" or "Accept" button on a website to indicate agreement to terms and conditions
• Scanned signatures: Pasting a scanned image of a handwritten signature into a digital document
• Email signatures: Sending an email that indicates consent or approval of the attached document

Use cases:

• Low-risk agreements such as internal memos, simple contracts, or acknowledgments
• Routine business transactions where high-level security is not a primary concern

2. Digital signatures

Digital signatures use cryptographic techniques to secure the signature and verify the signer's identity. Digital signatures are created using a digital certificate issued by a trusted certificate authority (CA).

Examples:

• Public key infrastructure (PKI): Using a PKI to create a unique digital signature. The signer uses a private key to create the signature, and the recipient uses the corresponding public key to verify it.
• Digital signature platforms: Electronic-signature platforms that provide secure digital signing services. These platforms use digital certificates to authenticate signers and ensure the integrity of the signed document.

Use cases:

• High-value contracts, legal agreements, and financial transactions where security and authenticity are critical
• Regulatory filings and compliance documents that require verifiable signer identity and document integrity

3. Biometric signatures

Biometric signatures involve the use of unique biological characteristics of the signer for authentication. This method ensures that the signature is uniquely tied to the individual, providing a high level of security.

Examples:

• Fingerprint scans: Using a fingerprint scanner to capture and verify the signer's fingerprint as part of the signing process
• Facial recognition: Utilizing facial recognition technology to verify the signer's identity before allowing them to sign a document
• Iris scans: Using an iris scanner to authenticate the signer based on their unique iris patterns

Use cases:

• High-security transactions and agreements that require high-level authentication
• Situations where strong identity verification is necessary, such as in healthcare, banking, and government services

4. Clickwrap signatures

Clickwrap signatures involve users indicating their agreement to terms and conditions by clicking a checkbox or button. This type of signature is commonly used for online agreements.

Examples:

• Website terms of service: Users click "I Agree" to accept the terms of service when signing up for a website or online service.
• Software licenses: Clicking a button to accept the license agreement before installing software

Use cases:

• Online services and software where users need to accept terms and conditions
• eCommerce transactions where buyers agree to terms before completing a purchase

Legal Requirements for Electronic Signatures

To ensure that an eSignature is legally valid and enforceable, the following basic criteria must be met:

1. Consent of all parties

Both the sender and the recipient must agree to use eSignatures for their transaction. This consent is typically documented during the signing process, either through an explicit opt-in mechanism or by using software that logs the agreement to sign electronically. Without clear consent, the validity of the eSignature could be challenged.

Example: An online form where users check a box agreeing to use eSignatures for the agreement.

2. Identity verification

The signer’s identity must be verifiable to establish that the eSignature is authentic and legally attributable to them. Common methods of identity verification include email authentication, multi-factor authentication (MFA), secure login credentials, or using a digital certificate issued by a trusted certificate authority (CA). For high-value or sensitive transactions, additional verification measures may be implemented.

Example: A digital signature platform that requires users to enter a one-time password (OTP) sent to their registered mobile phone.

3. Document integrity (tamper proof)

Once an eSignature is applied, the document should be locked or encrypted to prevent unauthorized modifications. Reliable eSignature platforms use hashing algorithms and encryption techniques to maintain the document’s integrity, creating a secure and immutable record of the transaction.

Example: A contract signed using a digital signature that shows an alert if any changes are made after the signature is applied.

4. Record retention/audit trails

A complete and accessible record of the eSignature process must be maintained. This includes a log of all actions taken during the signing process, such as timestamps, IP addresses, and user authentication data. These audit trails serve as evidence in case of disputes and help organizations comply with regulatory requirements for recordkeeping.

Example: An eSignature platform that keeps a secure, time-stamped audit trail of each step in the signing process, from document creation to final signature.

Limitations and Exceptions

Section 103 of ESIGN excludes specified records and notices from the federal Act's general electronic-record and electronic-signature rules. The exclusion does not by itself make electronic execution invalid under another applicable federal or state law; the governing special law and its formalities must be checked for each document. The excluded or specially treated categories include:

• wills, codicils and testamentary trusts;
• adoption, divorce and other family-law matters;
• court orders, notices and official court documents;
• notices concerning utility termination, default, repossession, foreclosure, eviction, or termination of health or life-insurance benefits;
• product-recall or material-failure notices involving health or safety;
• documents accompanying the transportation or handling of hazardous materials; and
• specified Uniform Commercial Code transactions outside the provisions retained by ESIGN. State enactments, including UETA-based statutes and New York's Electronic Signatures and Records Act, must be reviewed together with sector and document-specific rules.

Industry Applications and Typical Use Cases

eSignatures have become an integral part of business processes across various industries in the United States, driven by the need for efficiency, security, and convenience. Several key sectors have embraced eSignatures for streamlining operations and enhancing customer experiences.