e-Signatures are better than physical signatures in most situations. Here’s what you should know.
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.)
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:
(This article is general in nature and is not legal advice.)
How to draft and negotiate contracts to create better deals.
What is a Contract?
Essential Contract Terms
Reviewing & Negotiating