In a time of global transactions which more often than not occur without a single physical meeting between the parties, it is important to understand when an electronic signature is legal and appropriate. The two federal statutes that address this question are the Electronic Signatures in Global and National Commerce Act 2000 (ESIGN) and the Uniform Electronic Transactions Act 1999 (UETA).
Both ESIGN and UETA establish that electronic signatures are legal, but are subject to certain exceptions including contracts or other records to the extent they are governed by: (i) a statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts; or (ii) a state statute, regulation, or other rule of law governing adoption, divorce, or other matters of family law. There also are several exceptions to consumer-related transactions and notices.
On a federal level, ESIGN creates a standard for legal recognition of electronic signatures in the case of transactions pertaining to interstate or foreign commerce, which states may modify, limit, or supersede, subject to certain requirements. UETA on the other hand applies only to transactions between parties when all parties have agreed to conduct transactions electronically. To substantiate this requirement, it is often recommended that parties include a provision in the applicable document whereby they agree to transact electronically.
The UETA does not eliminate requirements of notarial law, such as a requirement that a notary physically witness the party’s signature but it does permit any document that requires a notary signature may be signed electronically. Likewise, the UETA does not supersede manual signature requirements for certain contracts and records, including requirements for the execution and creation of wills, codicils, and testamentary trusts regulated by state statute. Forty-seven states and the District of Columbia have adopted the UETA; however, each state’s UETA statute should be carefully reviewed for exceptions which may differ between jurisdictions.