White Paper – Validity Of Electronic Signatures In The United States Of America

Introduction

Electronic signatures ("e-signatures") have revolutionized how contracts and documents are executed, streamlining commerce and communication in both the private and public sectors. In the United States, the legal validity of e-signatures is governed primarily by two frameworks: the federal Electronic Signatures in Global and National Commerce Act ("ESIGN Act") and the state-level Uniform Electronic Transactions Act ("UETA"). Together, these provide a legal basis for treating electronic signatures as equivalent to handwritten ones, provided certain conditions are met.

Legal Framework

1. The ESIGN Act, enacted in 2000, affirms that contracts and signatures cannot be denied legal validity solely because they are electronic. According to Section 101(a), "A signature, contract, or other record relating to such transaction may not be denied legal effect... solely because it is in electronic form".¹ The ESIGN Act defines an electronic signature as "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".² The statute emphasizes intent to sign and logical association of the signature with the document, ensuring that electronic methods are valid when used deliberately and contextually.
2. The UETA, currently adopted by 49 states in the United States of America (excluding New York), provides a parallel framework at the state level. Section 7(a) of UETA similarly declares that "A record or signature may not be denied legal effect or enforceability solely because it is in electronic form".³ New York follows its own Electronic Signatures and Records Act ("ESRA"), which mirrors UETA in allowing electronic signatures for most transactions.⁴

Key requirements for validity

1. Intent and consent: Like the traditional approach of execution contracts, both ESIGN and UETA require that a party intends to sign electronically and consents to do business electronically. Consent must be explicit in consumer transactions, and businesses must provide disclosures about system requirements and record accessibility.⁵ In Cloud Corp. v. Hasbro, Inc., the court held that intent, even in email exchanges, could form a binding contract if both parties so intended.⁶
2. Record retention: To be enforceable, electronic records must be retained in a way that accurately reproduces them and is accessible for later reference.⁷ This supports their admissibility in court and aligns with general contract law evidentiary standards.

U.S. courts have generally upheld electronic signatures when the parties' intent and proper procedural mechanisms are evident. In Schnabel v. Trilegiant Corp., the Second Circuit noted that assent must be clear and not buried in terms that are difficult to locate or understand.⁸ Similarly, Berman v. Freedom Financial Network emphasized that user interfaces must make it obvious when users are binding themselves to terms.⁹

These decisions show that contract formation using electronic methods is subject to traditional principles like notice, consent, and mutual assent.

Limitations and exceptions

Similar to India, some categories of documents are excluded from electronic signature applicability. These exclusions are provided in both federal and state law based on policy concerns and the need for traditional formalities in highly sensitive matters.¹⁰ These include:

1. Wills and testamentary trusts;
2. Divorce and family law documents; and
3. Certain sections of the Uniform Commercial Code (e.g., negotiable instruments).

Practical implications

For businesses, electronic signature systems must ensure that they clearly capture of intent and consent of each signer, audit trails for non-repudiation of each contract, secure storage and retrieval, and compliance with federal and state requirements.

Conclusion

Electronic signatures are legally valid and enforceable in the United States under the ESIGN Act and UETA. The legal framework ensures that electronic records and signatures have the same standing as physical ones, as long as core elements such as intent, consent, and reliability are satisfied. Court interpretations have reinforced these principles while cautioning against deceptive or ambiguous designs in digital interfaces. As technology evolves, electronic signatures will continue to play a vital role in secure, efficient, and legally binding transactions.

Footnotes

1 Electronic Signatures in Global and National Commerce Act, 15 USC §§ 7001–7006 (2000).

2 Ibid.

3 Uniform Electronic Transactions Act § 7(a) (1999).

4 New York State Technology Law § 302 (Electronic Signatures and Records Act).

5 15 USC § 7001 (n 1).

6 Cloud Corp v Hasbro Inc 314 F3d 289 (7th Cir 2002).

7 15 USC § 7001(d) (n 1).

8 Schnabel v Trilegiant Corp 697 F3d 110 (2d Cir 2012).

9 Berman v. Freedom Fin. Network, LLC, 30 F.4th 849 (9th Cir. 2022).

10 Electronic Signatures in Global and National Commerce Act, 15 USC § 7003 and Uniform Electronic Transactions Act § 3 (1999).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.