What Are ESIGN and UETA?

If you work in-house on a legal team, chances are you've come across the terms Uniform Electronic Transactions Act (UETA) and United States Electronic Signatures in Global and National Commerce (ESIGN) Acts. But what do these acts actually cover? What's the difference between the two? Read on for a quick and dirty overview.

What is UETA?

UETA is a set of laws that govern electronic signatures and records (including contracts). It was passed in 1999 by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in an effort to create uniformity among the various state laws governing electronic transactions. 

To date, 49 states, the District of Columbia, Puerto Rico, and the US Virgin Islands have adopted a version of UETA. While all states but New York have adopted UETA, the version of UETA adopted by the states is not “uniform,” and there are variations on a state-by-state basis. While New York is the only state that has not adopted a version of UETA, New York has adopted a similar law governing electronic signatures and records and making electronic signatures legally enforceable. 

Under UETA, electronic records and signatures cannot be denied legal validity or enforceability simply because it is in electronic form or electronically signed, giving electronic records and signatures legal force and effect like their paper counterparts. UETA lays out requirements for legal electronic signatures.

• Intent: Electronic signatures are valid if both parties intend to sign (similar to a wet signature).
• Consent: All parties involved in a contract or document must consent to do business electronically. If you’re contracting with consumers, there are some additional considerations and requirements that may apply to your transaction(s).
• Association of signature to the electronic record: A record must be produced displaying the history of the signing process clearly, showing how and when the document was signed and that it has not been modified since being signed. The electronic signature must be linked or logically associated with the record.
• Record retention: Signatories to a document must receive a copy of the completed document, and signatories must maintain a complete and accurate copy of the electronic record of the document.

What is ESIGN? 

So what about ESIGN? The ESIGN Act, a federal law, was passed in 2000 to approve the validity and legal enforceability of electronic signatures. Under the ESIGN Act, electronic signatures are legal in every state and United States territory where federal law applies.

In practice, this means that under the ESIGN Act no state can deny the validity of electronic signatures, even if the state has not adopted a version of UETA. If there is a conflict between a state law for eSignature (including a version of UETA adopted by a state) and the ESIGN Act, the ESIGN Act preempts the state law.

What transactions are covered by UETA and ESIGN? 

The UETA and ESIGN Act generally apply to business transactions. However, there are exceptions to the application of the ESIGN ACT and UETA. The ESIGN Act and UETA do not, for example, apply to wills, codicils, or testamentary trusts, and the ESIGN Act and some state versions of UETA do not allow application to documents related to adoption, divorce, or other family law matters. 

Additionally, while the UETA and ESIGN Act apply to the sale of goods under Article 2 of the Uniform Commercial Code (“UCC”) and leases under Article 2A of the UCC, other types of transactions under the UCC may not be covered. There are a few other types of transactions that may be excluded from the ESIGN Act, and there are certain states that have exceptions as to what types of transactions and/or documents their version of UETA applies to. As such, it is important to review the eSignature laws that may apply to your use case. 

TLDR: Your eSignature solution needs to be compliant with ESIGN and UETA.

Is LinkSquares compliant with UETA and ESIGN?

LinkSquares is designed to comply with UETA and the ESIGN Act. Here’s how: 

• Intent and Consent: All Signatories must click through and agree to the Use of Electronic Signature-Only before applying their electronic signature. This agreement to accept digital signatures is recorded in the Activity Log in LinkSquares Finalize AND the downloadable Signature History PDF.
• Association of signature to the electronic record: Once a PDF is digitally signed, the digital certificate is embedded within the PDF. The digital certificate contains a unique signature request ID that can be mapped back to the document ID and each unique signatory. All recipients receive a digitally signed signature history PDF documenting the activity during the signing process.
• Record retention: All recipients receive a fully signed copy of the agreement and the signature history PDF in LinkSquares.

LinkSquares Sign — natively integrated into the LinkSquares platform — is built with security, compliance, and enforceability in mind. When you use LinkSquares Sign, you can rest assured knowing that you're complying with best practices for electronic signatures and records. Contact us today to learn more. 

The information in this page is not legal advice, and you should consult an attorney to obtain legal advice with respect to the laws referenced in this article, or any other e-signature laws.