Yes. eSignatures are Valid.
In our new pandemic economy, many people have seen an increase of electronic signatures in their own lives and often ask the question, “Are eSignatures a legal and binding way to sign documents?” The simple answer is Yes. eSignatures are valid for most legal documents.
In this month’s blog, we will look at what an e-signature is, the different types of eSignatures, and what states have different requirements. We will focus on the United States for now since each country has different laws and requirements, but many have adopted the same digital signature tools and allow many of the same documents to be signed electronically.
What is an electronic signature?
The government defines electronic signatures as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed and adopted by a person with the intent to sign the record.”1 Essentially, it’s an electronic footprint that represents your physical signature, and which can be traced back to you as proof that you intentionally agreed to something (i.e. purchase agreement, employment contract, home sale transaction, etc.).
Did you know a contract can’t be denied just because it was signed electronically? 2
It’s true! Your contract or agreement cannot be denied simply because you signed it electronically. However, there are situations where ink-to-paper signatures are required. The ESIGN act and UETA act are laws that the United States adopted to create requirements and rules to ensure the validity and security of electronic signatures. There may be other written conditions as well, so be sure to consult with an attorney to establish an enforceable contract.
eSignature vs. Digital Signature: They’re the same, right?
We use the term “e-signature” in conversations but there are two common terms for electronic signatures – Electronic Signatures and Digital Signatures. Let’s explore the difference.
- Electronic Signature. This term refers to any electronic process that indicates acceptance of an agreement or record. Most electronic signature solutions in the United States fall into this broad category. Electronic signatures use a wide variety of common authentication methods to verify the signer’s identity, such as email, corporate ID, password protection, or a PIN sent to a mobile phone. Proof of signing is demonstrated via a secured process that often includes an audit trail and a final tamper-evident digital certificate embedded into the completed signed document.
- Digital Signature. This type of signature uses a digital certificate from a trust service provider (TSP), such as a certificate authority (CA), to authenticate a signer’s identity. The digital certificates demonstrate proof of signing by binding the digital certificate associated with each signature to the document using encryption.
These definitions apply broadly and are often accepted at the Federal level. However, as with other regulatory issues, individual states can elect to impose stricter guidelines. Three states, New York, Illinois, and Washington have created additional regulations and laws that govern eSignatures. Although eSignatures are valid, be sure to review the Federal and State requirements regarding signing electronic documents before you sign.
When can you use an eSignature?
Allowed most of the time:
- Sales proposals
- Purchasing contracts
- Employment agreements
- Non-Disclosure agreements
- Non-Compete agreements
- Leases & rental agreements
- Tax documents
- Bank forms
- Insurance paperwork
- School forms
- Permission slips
- Model and product releases
Not typically allowed:
Documentation must be physically signed (wet signature)
- Wills, Living Wills, and Trust documents
- Areas of family law, including adoption and divorce
- Uniform Commercial Code
- Court documents
Before you hit your keyboard to sign a document, take a moment to understand the process.
Intent to sign. You, as the signer, must show clear intent to sign an agreement electronically. The “accept” button is clearly labeled in most circumstances after or around your digital signature. Clicking Accept indicates that you are purposefully signing the document electronically.
Consent to do business electronically. Most laws require a form of consent that you are doing business electronically with the other party. The standard consent clauses look something like, “The parties agree that this agreement may be electronically signed. The parties agree that the electronic signatures appearing on this agreement are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility.” 3
Opt-out clause. There are manual options available If you are not willing to sign the document electronically. Most likely, you would need to be able to print the document, sign it with a pen, mail it in, or scan and email it.
Signed Copies and record retention. Both parties must have a fully executed agreement, which means documents that have both parties’ signatures, sent to them. Most of the time, the executed document is emailed to both parties to allow for records to be stored.
So, Yes. eSignatures are valid, convenient, and commonly accepted throughout the United States. They provide fast and secure binding of agreements.
Getting ready to sign a contract or purchase agreement? Let’s connect and make sure you know how to proceed with signing a document electronically. I’m here to help!
Want to learn more and dive deeper into the history, features, and regulations surrounding eSignatures? Here are a few resources to get you started.
Disclaimer: Please note that this blog is informational only and is not meant to provide legal advice. Each situation is different and requires informed care and decisions. Please seek guidance from a licensed attorney before proceeding with your transaction.