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Legal Basis for Electronic Signature in USA

(Last Updated On: October 20, 2020)

Legal Benefits of Electronic Signatures:

Electronic signatures have become very popular these days and rightly so. There are many reasons why they are preferred by legal authorities. Here are the biggest benefits of electronic signatures:

  • They are more legally defensible as compared to wet-ink signatures. Although both wet-ink and electronic signatures enjoy the same legal status under laws like The Uniform Electronic Transactions Act (UETA), it is the latter which is only completed after biometric verification. Due to this reason, electronic signatures can be defended in a court of law easily.
  • Electronic signatures are the best way to keep a document secure. Once it has been signed, it can be shared with the parties without the fear of tempering. No one can rearrange a document once an electronic signature has been added to it.
  • Since electronic signature use bank level encryption and biometric signature capture, falsifying them is not possible.

Legal Basis for Electronic Signature in USA:

Once electronic signature system gained popularity, countries had to enact laws to regulate them. Here are the electronic signature laws that form the legal basis in the US:

ESIGN Act:

There are various laws in the states of the US pertaining to the electronic signature. But it is a federal law that defines the guidelines for interstate commerce. The Electronic Signatures in Global and National Commerce Act (ESIGN) is a federal law which was passed by the Congress in 2000.

The general intent of the ESIGN Act is defined in the first section according to which, a contract or signature:

(101.a) “may not be denied legal effect, validity, or enforceability solely because it is in electronic form”

Electronic signatures are also defined in the ESIGN Act.

Sec 106 (5) “The term ‘electronic signature’ means 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.”

Intent to Sign:

According to the ESIGN Act, a signer must show clear intent that they wish to sign an agreement electronically. Common examples of this is drawing your signature from a mouse or clicking the “I Accept” button.

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The Uniform Electronic Transactions Act (UETA):

In 1999, UETA was drafted to so a legal framework can be provided to each state in the US for the use of electronic signatures. UETA has been adopted by forty-eight states, the District of Colombia, and the U.S. Virgin Islands.

In Section 2, part 8, UETA contains the definition of an electronic signature:

“means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”

In Section 6, the intended purpose of UETA is described as:

“to facilitate and promote commerce and governmental transactions by validating and authorizing the use of electronic records and electronic signatures”

Section 7 explains the legal value of electronic signatures:

(c) “If a law requires a record to be in writing, an electronic record satisfies the law.”

(d) “If a law requires a signature, an electronic signature satisfies the law.”

The section 11 of this section gives notary public and other officers to act electronically. This has eliminated the need for stamps or seals. It also saves time of people who had to go to the office of a notary public to get their documents notarized.

The Government Paperwork Elimination Act:

This act advises federal agencies to use electronic signatures, whenever practicable, when doing official business. The state agencies are required to conduct official business with public electronically whenever practicable.

The Act “preclude agencies or courts from systematically treating electronic documents and signatures less favorably than their paper counterparts.” Due to this act, citizens can interact with the federal government electronically whenever they want.

The GPEA requires federal agencies to provide citizens and entities a chance to submit their information to agencies electronically. Under the Act, federal agencies are also supposed to maintain electronic records, whenever possible.

The Act encourages the government to use several alternatives of electronic signature. This way, more options can be made available to the public. The Act also does not limit the government to one type of technology. Every government agency can decide which technology works best for it.



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