eSignature for Business and Commerce: ESIGN Act Overview

Are Electronic Signatures Legal Under the ESIGN Act?

Legal Framework

• Federal statute: ESIGN is a federal law enacted in 2000. Its general rule prohibits denying legal effect solely because a signature is electronic.
  
  
• State uniform law: Most U.S. states have adopted UETA, which harmonizes with ESIGN and governs intrastate transactions. ESIGN pre‑empts inconsistent state laws but defers to states that have enacted UETA or equivalent.
  
  
• Consumer protection: Before providing electronic records, businesses must give clear disclosures and obtain affirmative consent. Consumers must be informed of hardware and software requirements and can withdraw consent at any time.
  
  
• Exclusions: ESIGN does not apply to certain documents, including wills, testamentary trusts, adoption or divorce records and court notices. State law may also impose additional requirements.
  

Requirements for ESIGN‑Compliant Electronic Signatures

Consumer consent and disclosures

• Affirmative agreement: Parties must agree to transact electronically; consent may not be implied.
  
  
• Clear disclosures: Prior to consent, the consumer must receive information about their rights, including the right to receive a paper copy, withdraw consent, and any fees associated with withdrawal.
  
  
• Hardware and software: The business must describe the technology required to access and retain the electronic record and notify consumers if these requirements change.
  
  
• Opt‑out and withdrawal: Consumers may withdraw consent without charge and must be informed of the consequences of withdrawal.
  

Signature validity and record retention

• Equal legal effect: Electronic signatures have the same legal effect as handwritten signatures; they cannot be denied because of their format.
  
  
• Audit trail: Businesses should maintain an audit trail linking the signature to the signer’s identity and intent.
  
  
• Record retention: Electronic records must “accurately reflect” the information and remain accessible to all persons entitled to access for the required retention period.
  

Security and authentication

• Identity verification: Although ESIGN does not prescribe specific technologies, organisations should use reasonable methods (multi‑factor authentication, knowledge‑based questions or biometric checks) to authenticate signers.
  
  
• Tamper‑evidence: Systems should detect subsequent changes and preserve integrity.
  
  
• Confidentiality: Implement encryption and secure storage to protect personal data.
  

Common Use Cases for ESIGN‑Compliant E‑Signatures

ESIGN‑compliant signatures are used across nearly every industry. Examples include:

• Financial services: loan agreements, account openings and insurance applications.
  
  
• Real estate: purchase contracts, lease agreements and disclosures.
  
  
• Human resources: employment contracts, onboarding documents and policy acknowledgments.
  
  
• Healthcare: informed consent forms and HIPAA‑related documents (subject to state and federal healthcare laws).
  
  
• Government: permit applications and tax filings.
  

Implementation Considerations

• Platform selection: Choose a solution that obtains consumer consent, provides clear disclosures and maintains auditable records.
  
  
• Compliance with state law: Verify that your e‑signature process also satisfies UETA and any state‑specific requirements.
  
  
• Accessibility: Ensure signers can review and download documents using widely available technology and are offered alternative methods when necessary.
  
  
• Documentation: Retain evidence of consent, signed records and audit logs for the applicable retention period.
  

Future Developments

State legislatures continue to refine digital signature laws. Some states have amended UETA to recognize blockchain‑based signatures and smart contracts, and federal regulators may update ESIGN disclosures for evolving technology. Organisations should monitor legal developments, especially regarding identity verification standards and emerging technologies such as digital wallets.

Disclaimer

This information is provided for general informational purposes only and does not constitute legal advice. Although we strive to ensure accuracy, laws and regulations change. Consult qualified legal counsel to determine how ESIGN requirements apply to your specific circumstances.

‍