United States

Overview

In 2000, the Electronic Signatures in Global and National Commerce (E-Sign) Act made electronic signatures legally binding across all U.S. states and territories that are subject to federal laws. When a federal law isn't in play, most U.S. states follow the Uniform Electronic Transactions Act (UETA) which provides a legal framework for electronic signatures at a state level. UETA has been adopted across 49 states, plus the District of Colombia, U.S. Virgin Islands and Puerto Rico. Having opted out of UETA, New York has instead passed the Electronic Signatures and Records Act.

There are four major requirements for an electronic signature to be recognized as valid under U.S. law:

• Intent: A signer must express their intention to use an electronic signature when signing a document.
• Consent: All parties involved in a contract or document must consent to doing business electronically. This consent may be written as a clause in the signed document.
• Verification: To verify a document, an audit trail needs to clearly display the history of the signing process.
• Record retention: Any electronic signature software you use to sign the document must provide all signers copies and access to the document or contract.

How is an electronic signature defined?

UETA and the E-Sign Act define an electronic signature as “an electronic sound, symbol, or process attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.

What are some examples of eSignature use cases?

• Finance: Consent forms, broker contracts, loan applications, financial statements, tax forms, account openings, financial statements, transaction disputes, and underwriting documents
• Human Resources: Employment contracts, onboarding paperwork, non-disclosure agreements, company policies, offer letters, and severance agreements
• Sales: Order confirmations, invoices, sales agreements, quotes, proposals, service agreements, partner contracts, and terms and conditions
• Real Estate: Purchase contracts, contract addendums, agency agreements, appraisals, disclosures, rental and leasing agreements, mortgage documents, and titles and deeds
• Legal: Powers of attorney agreements, compliance documents, confidentiality agreements, client and stakeholder reports, engagement letters, and practice continuation agreements

Are there any exceptions to where eSignatures can be applied?

The E-Sign Act does not apply to the following transactions:

• Wills, codicils, or testamentary trusts
• Documents related to adoption, divorce, and family law
• Court orders, notices, or official court documents
• The cancellation or termination of utility services, health insurance, or benefits and life insurance benefits
• Product recall documents
• Notices of default, acceleration, repossession, foreclosure, or eviction
• Documents required to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials
• Documents governed by the Uniform Commercial Code (UCC)

UETA does not apply to the following transactions or documents:

• Wills and testamentary trusts
• Certificated securities

• Documents related to adoption, divorce, and family law
• Court orders, notices, or official court documents
• The cancellation or termination of utility services, health insurance, or benefits and life insurance benefits
• Documents required to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials

Resources

1. Electronic Signatures in Global and National Commerce Act: https://www.fdic.gov/resources/supervision-and-examinations/consumer-compliance-examination-manual/documents/10/x-3-1.pdf
2. Uniform Electronic Transactions Act (UETA): https://www.uniformlaws.org/committees/community-home?CommunityKey=2c04b76c-2b7d-4399-977e-d5876ba7e034

DISCLAIMER: This information provides general knowledge on the legal framework for electronic signatures. It should not be taken as a substitute for qualified legal counsel. As regulations constantly evolve, Nitro cannot guarantee that this information is up to date. For further advice, seek out the expertise of a qualified lawyer.