How to Sign a Contract Using e-Signatures

e-Signatures are better than physical signatures in most situations. Here’s what you should know.

Most e-signatures are valid

The ESIGN Act (the Electronic Signatures in Global and National Commerce Act) was signed into law in 2000. Moreover, most states have adopted some from of the UETA (the Uniform Electronic Transactions Act).

In general, these laws provide that:

(1) a signature may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and

(2) a contract may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.

This general rule of validity will only apply if:

(a) the signing party intended to sign the contract;

(b) the signing party consents to do business electronically; and

(c) the electronic signature platform saves and retains the contract itself and an associated record that reflects the process under which the signature was obtained (ie, an “audit trail”).

This means that the vast majority of e-signed contracts are enforceable, however, there are some exceptions. Most notably, if a separate statute requires physical signatures for a document (like a will, trust, or related family law contracts), then an electronic signature may not be valid. Additionally, there are very specific exemptions listed in the ESIGN Act and the UETA.

(Related: make sure you properly identify the parties and use the right signature formats in this guide.)

Here’s why you should use e-signatures

These benefits are probably obvious to anyone that runs a business in the 21st century. But in case they are not, here are some of the benefits to using e-signatures:

• You can say goodbye to paper, pens, mail, faxes, scanners, and email attachments!
• Collecting signatures is much faster when using e-signatures.
• Once signed, the e-signature platform can automatically send final copies to each party (and anyone else you copy).
• The e-signature platform will maintain a copy of the contract for you.
• The e-signature platform will capture, retain, and send to you, an audit trail – court admissible advice regarding when, where, and how a signing party signed the contract.
• It’s free for the recipients. The only people that have to pay are the businesses creating and sending the contracts. But even then, it’s inexpensive (like $25/month).

(This article is general in nature and is not legal advice.)