Electronic signatures (also known as digital signatures) are increasingly relied on to expedite and complete business transactions. They are almost universally recognized as being legally-binding, and have been recognized by law in the United States since 1999. Certain criteria, however, must be met for them to reach that point.
Two laws – the United States Electronic Signatures in Global and National Commerce (ESIGN) Act, and the Uniform Electronic Transactions Act (UETA) – govern the legality of digital signatures. Each one has four major requirements that need to be met for a digital signature to be recognized as valid under U.S. law. Those requirements are:
• Intent to sign – Digital signatures, like traditional ink signatures, are valid only if each party intends to sign and agree that digital signatures are an acceptable substitute to traditional signatures.
• Consent to do business electronically – All parties involved with the transaction must consent to do business electronically. Electronic records may be used in consumer transactions only when the consumer has:
• Received UETA Consumer Consent Disclosures
• Agreed to use electronic records for the transaction
• Has not subsequently withdrawn their consent
• Association of signature with the record – In order to qualify as an electronic signature under the law(s), any system that facilitates the transaction must also keep an associated record that proves it was executed with an electronic signature.
• Record retention – Records of electronic transactions that require electronic signatures must be retained for reference by all parties or persons involved.