What Is UETA & Why Does it Matter for Electronic Signatures?

Since the late 1990s, electronic signatures have continued to increase in usage. While officially conceived in the late 1970s, eSignatures didn’t become a widely acceptable way to sign documents until the late 1990s. Today, however, digital signatures are not only common, but their use has skyrocketed, particularly as workers moved to remote offices.

MarketsandMarkets, a company that offers B2B insights and research, reports that in 2020 the digital signature industry reached $2.8 billion — a number expected to grow to $14.1 billion by 2026. The current laws on the validity of electronic signatures, however, remain rooted in an earlier time. Guidance for electronic signatures still comes from two predominant sources — the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce (ESIGN) Act.

 

The Uniform Electronic Transactions Act, most commonly called UETA, offers a uniform set of rules that govern electronic commerce transactions. Or, more simply put, UETA provides a legal foundation and framework for electronic signatures.

 

Established in 1892, the nonprofit Uniform Law Commission (ULC) provides U.S. territories and states with cohesive legal guidance on a variety of subjects. Also called the National Conference of Commissioners on Uniform State Laws, ULC has 350 commissioners, each of whom must be an attorney. Governors often appoint their states’ commissioners.

Largely funded by state appropriations, the ULC’s role is to draft uniform laws for states to consider enacting. Since its founding, the ULC has produced more than 300 uniform acts, most of which focus on family and domestic relations law, estates, probates, and trusts, real estate, and commercial law.

Notable uniform laws the ULC developed include the Uniform Commercial Code, the Uniform Child Custody Jurisdiction and Enforcement Act, and the Uniform Electronic Transactions Act.

On July 26, 1999, the National Conference of Commissioners on Uniform State Laws adopted and recommended that states enact the Uniform Electronic Transactions Act. California was the first to adopt UETA, with many other states following suit. However, on June 30, 2000, then-President Bill Clinton also signed the federal ESIGN act, which offered similar guidance on electronic signatures at a federal level.

 

According to the act, “the purpose of the UETA is to remove barriers to electronic commerce by validating and effectuating electronic records and signatures.”

Before UETA was enacted, it was up to individual courts to determine whether or not electronic documents were admissible as evidence. UETA effectively states that records should not be dismissed solely because they’re electronic.

Here are more key points of UETA:

• The Uniform Electronic Transactions Act features 21 sections that lay out the scope, definitions, and establish the legal framework of electronic signatures. 
• UETA clearly differentiates electronic signatures from electronic records, also stating that the two should combine to ensure their legal validity. 
• Given that UETA is a state-by-state law, states can adopt or throw out certain UETA regulations.
• The scope of UETA extends to most documents, but excludes those that require physical signatures, such as wills, trusts, eviction notices, property transfers, codicils, custody, and adoption papers. 
• UETA primarily offers guidance for commercial, government, and business documents. 

 

UETA also encompasses a few main requirements to ensure legitimacy of electronic signatures.

• 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. 

 

The Uniform Electronic Transactions Act only covers U.S. states and territories. Most states adopted UETA, along with the District of Columbia, the U.S. Virgin Islands, and Puerto Rico. While 47 states use UETA as a legal framework, Washington, Illinois and New York follow other state-passed legislation that guides electronic signatures and records. Documents in Washington, for example, fall under the state’s Electronic Authentication Act.

Both UETA and its federal counterpart ESIGN govern the United States’ electronic signatures. More than 60 countries currently have some sort of eSigning guidance on the books, however. Canada, for instance, falls under the Personal Information Protection and Electronic Documents Act (PIPEDA), which regulates privacy and security of consumer data. The United Nations’ UNCITRAL Model Law on Electronic Signatures (MLES) offers criteria other countries can use to establish eSignature laws.

 

UETA’s guidance is on a state level, whereas the ESIGN Act offers federal guidance on electronic and digital signatures. Adopted shortly after UETA, ESIGN’s main tenets of intent, consent, verification, and record retention are the same as UETA.

Given, however, that ESIGN is a federal law, it aims to resolve conflicts of any state-based eSignature laws, whether UETA or other state-adopted regulations.

Currently, there’s a bill in the U.S. Senate introduced in December 2020 that aims to modernize the ESIGN act. The legislation proposes repealing such eSign requirements relevant two decades ago, such as consumers demonstrating their ability to electronically access information in order to provide electronic record consent.

 

Since UETA only applies to business, commercial, and governmental transactions in 47 states, other state and federal regulations may cover criteria beyond the scope of the Uniform Electronic Transactions Act. For instance, if your client signs a contract electronically that falls under UETA, any non-business agreements conducted or discussed via email between client and business is likely not subject to UETA regulations.

 

While 1999 was practically the Stone Age compared to the cutting-edge technology of today, UETA helped clearly define terms such as "electronic signature,” “electronic document,” and “government agency,” effectively expanding the framework of what electronic signatures are, how they can be used, and when and how to use them.

 

At Nitro, each of our solutions allows you and your customers to electronically sign documents while in full UETA compliance. Nitro PDF Pro or Nitro Sign, for instance, make it effortless to send and receive documents and contracts, sign large batches of paperwork in minutes, collaborate with your remote team or your clients, and securely store copies of each record to create an audit trail.

As a leader in end-to-end digital transformation, Nitro’s suite of productivity tools ensures efficient eSignature workflows from anywhere and any device, and our custom templates seamlessly integrate with the tools your team already uses, such as Microsoft Word, Google Drive, and SharePoint. Each of our products protects sensitive information with sophisticated encryption options and verification keys, remains compliant with state and federal laws, and provides full control of security features.

Contact Nitro to learn more about how our productivity tools with digital and eSignature capabilities can transform your organization’s workflow processes.