Technology has upgraded the way businesses operate and deal with clients. The shift from traditional business methods such as face-to-face meetings and manual paperwork to digital solutions such as online customer relationship management and cloud-based document management is apparent. In fact, due to its long-term benefits, companies throughout the globe and across nearly all industries collectively spend billions of dollars every year to automate their workflows.
Utilizing digital solutions streamlines and automates the processes of companies, enabling them to focus on their core activities better. The birth of digital solutions has resulted in the rise of electronic signature applications. By definition, electronic signatures are symbols or digital data attached to an electronically transmitted document.
A signature is a globally recognized, unique, and personalized mark that people use to indicate identity and to give legal consent. In fact, its importance can be traced back as far as ancient times when some of the earliest people used words and symbols to denote identity. Today, the authority that signatures have is evident through its widespread use in legal transactions. While the majority of individuals still use traditional wet signatures, legally-binding electronic signatures prove to be a convenient digital solution that lets people accomplish more by exerting less effort.
While the use of electronic signatures is increasingly becoming prevalent, there are still companies and professionals who are reluctant about whether to integrate e-signature solutions into their professional transactions or stick with the traditional method of signing documents using a pen and paper due to security and legality concerns.
The legality of electronic signatures
To grant electronic signatures the same legal status as traditional wet signatures and to ensure their proper use, the U.S. passed e-signature laws.
UETA of 1999
The Uniform Electronic Transactions Act (UETA) of 1999 is a bill that determines the legality of electronic signatures in both commercial and government transactions; it secures the legality of electronic contracts and the validity of electronic signatures.
Forty-seven states, along with the District of Columbia, Puerto Rico, and the U.S. Virgin Islands recognize and implement the UETA; Illinois, New York, and Washington have their own bill on electronic signatures. Illinois adheres to the Electronic Commerce Security Act of 1999, New York adheres to the Electronic Signatures and Records Act of 2000, and Washington adheres to the Electronic Authentication Act.
E-SIGN Act of 2000
According to the U.S. Electronic Signatures in Global and National Commerce Act (E-SIGN Act) of 2000, an electronic signature is “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.” Therefore, any form of electronic signature that falls under the definition is considered legal. In essence, the bill extensively set the legal landscape for the use of electronic signatures and established its enforceability in the U.S.
Unlike the UETA that was adopted on a state-by-state basis, the E-SIGN Act is a federal act affecting all states in the U.S. It was created to facilitate the use of electronic records and signatures for transactions affecting interstate and foreign commerce to ensure that documents and contracts delivered electronically are valid and legal.
While electronic signatures are recognized in the U.S., for them to be valid, the person providing his signature should do it purposely and deliberately, there must be consent to transact electronically, and records associated with e-signing should be kept in a secure online database.
Electronic signatures introduced a new level of convenience for companies that regularly deal with legally binding documents. It has become a reliable solution for businesses that want to improve their productivity and increase profitability by adopting digital solutions.