Is Your “E-signature” Legally Binding?

Have you ever wondered about the validity of your signature when it is in the form of clicking an “I accept” box on the computer screen? Is the e-signature the same as putting your John Hancock on a piece of paper? The answer is, for the most part, yes. E-signatures are just as binding as signatures on a piece of paper. Like most legal matters, it is not always black and white and it is important to keep in mind the type of e-signature law that applies to your E-signature.

For over a decade, a common way of signing documents regarding student loans, cell phone provider contracts, and mortgages have been through electronic signatures, better known as E-signatures. Since 1999, legislators have succeeded in making a uniform legal effect of E-signatures across every state. In 1999, a number of states started to adopt the Uniform Electronic Transactions Act (“UETA”), which brought together differing state laws and make them uniform. UETA aimed to define E-signatures but most importantly, define the legal validity of E-signatures. Although 47 states have now adopted some form of UETA, states were initially not adopting the UETA fast enough for the United States Congress. In response, Congress passed a law in 2000, called the Signatures in Global and National Commerce Act (“E-SIGN”). When a person applies his E-signature in an interstate or foreign transaction, E-SIGN will apply. When transacting within one state, the state’s statute that is based off of UETA will apply.

  Although the UETA and E-SIGN are generally in concert with each other, there are slight differences. For instance, UETA requires an agreement between the contracting parties in order to change the effect of the E-signature. E-SIGN requires a “clear and conspicuous” statement informing the consumer of the effect of the E-signature in order to receive the consumer’s consent to use it. UETA is very permissive and does not require a statement. E-SIGN is silent on determining when a record has been sent and/or received and UETA makes it very clear. If a transaction includes both interstate and intrastate features, and the UETA and E-SIGN are at odds, the UETA will prevail. This is one of few times the federal lawmakers waive their preemptive powers over a state law that conflicts with a federal law.

Whether purchasing real estate or an online newspaper subscription, it is important to keep in mind that when you click on the “I agree” icon, it is equivalent to you signing your name on a piece of paper. Either the UETA or E-SIGN will apply, depending on the type of transaction.