What UETA and the ESIGN Laws Mean for Your Business

3-8-2016 | by Benjamin Fleshman

Electronic signatures were introduced as an increasingly international commerce began to embrace the internet as a viable method of transacting business deals. People needed a method for signing contracts that wouldn’t involve lengthy flights to meet in person with corporations all over the world. E-signatures were a way to save on time, printing and travel costs, and make the online economy run more smoothly overall.

At first, the legal precedence for electronic signatures was helter skelter—nobody really had any set system for dealing with them in a legal sense. At the turn of the century, the United States adopted two acts that standardized the legal proceedings for businesses across the nation.

The Uniform Electronic Transactions Act (UETA) of 1999, and The Electronic Signatures in Global and National Commerce Act (ESIGN Act) of 2000 established the legitimacy of electronic signatures. Nowadays, electronic signatures range from the iTunes button click to a saved version of your own, personal signature, and the UETA and ESIGN Act laws give them their legitimacy. They also establish certain guidelines for those companies who use e-signatures.

Legitimacy of ESIGN Laws

First and foremost, these laws only grant legitimacy to certain types of contracts. Because the government’s principle aim in passing these laws was to ease economic growth and commercial activity, thus promoting the overall wealth of the nation and stability of the economy, they made the laws applicable primarily to commercial contracts, such as construction management or marketing contracts. The following is a list of contracts which are excluded from these laws:

  • Wills, codicils, and trusts
  • Adoption paperwork
  • Divorce decrees
  • Certain areas of the Uniform Commercial Code
  • Court orders and notices
  • Official court documents, including briefs and pleadings
  • Notices of the termination of utility services
  • Notices of default, foreclosure, repossession, or eviction
  • The cancellation of insurance benefits
  • Product recalls or notices of material failures
  • Documentation accompanying the transportation of hazardous materials

If your business deals primarily with these types of contracts, then e-signatures are not acceptable, according to UETA and the ESIGN Act. Your documents will require paper and pen signatures, which is fine as they are typically local in nature.

If, however, your typical contract is not included on this list, then you can use e-signatures to your advantage. You will be required to comply with certain criteria, however, as you utilize e-signatures.

While you are not required to offer paper contracts, your company should provide patrons with a knowledge of how to access and store their own documents, based on the software or hardware that your company utilizes.

Not only do your customers and partners need access to the contract, but you will be required to maintain all of your contracts and documents in a location where they can be produced at some future time, should the need arise. You may need to clarify or prove the legitimacy of the contract, and that requires that it be easily accessed. The same would be true of a paper contract, but it can be particularly important with an electronic document.

Perhaps the best part of using electronic signatures is the ease of use and access with regards to the signature and contract. Often times, you can store your documents in an easy access location: on the internet. With Concord Worldwide, your documents will be easily accessed, easily edited, and easily validated through signature, but only by those that you grant access to. Your documents are perfectly secure with our cloud-based contract management system, and this means that all of the simplicity of e-signing costs you neither legitimacy nor security in the contract. The UETA and ESIGN Act grant you a lot of flexibility in how you expand your commercial interests, so be sure to take full advantage of the opportunity to use e-signature to build your business quickly.

To learn more, give one of our contract experts a call at 844-693-7446.

For more information, see this article.