Can an electronic signature be legally binding?

The act of signing our name in longhand to seal a contract or authenticate a document, such as a letter or report, has had legal significance for nearly as long as there has been written language, even before paper. The first known signature in human history was that of an otherwise forgotten Sumarian scribe, Gar Ama, who etched his name on a clay tablet in 3100 BCE.

Since paper documents are well on their way to becoming the clay tablets of the 21st century, you may be wondering if an e-signature can be legally binding. The answer is yes, and the implications for business are significant.

E-signatures are the biggest development in how people agree to contracts since 1677, when the English Parliament made signatures a legally required feature of a valid, written contract in the Statute of Frauds Act.

E-signatures have been binding since President Bill Clinton e-signed (after first signing the written legislation the traditional way) the Electronic Signatures in Global and National Commerce (ESIGN) Act in 2000. The law, along with the Uniform Electronic Transactions Act, which was passed by every state in the U.S. in some version, has made electronic contracts, when legally executed, legally enforceable.

Elements of a valid e-contract

There are a few basic requirements for making electronic signatures legally enforceable, but once the requirements are met, the electronically signed contracts can be enforced the same way as a printed contract signed with a pen.

To enforce the contract, there must be clear evidence the signer understood the contract and intended to accept the terms. In most instances the very act of signing the agreement satisfies that requirement, as long as a record of the electronic signature was created at the time of execution showing that the document was accepted by the signer.

Consumer contracts have particular requirements, the most important of which is that the consumer must give consent to do business electronically by affirmatively opting into the electronic signature process. To meet this requirement, you must include language in the contract stipulating that the consumer agrees to the use of electronic signatures, or by requiring the signer to check a box.

Not all documents can be e-signed

E-signatures are ubiquitous in online commerce, but there are several very important, and often personal, documents that still must be signed by hand. In general, this includes any document that must bear a raised notary seal, such as wills, trusts, powers of attorney, both birth and death certificates, and legal notices such for an eviction, repossession, or foreclosure. Only a few states allow some documents to be notarized electronically.

Outside of these special cases, e-signatures are legally enforceable, which has made them an important component of online commerce. If you want to start using e-signatures for your agreements, try JotForm’s e-signature widget.

Peter Page is a professional writer whose career began in print. He has worked with hundreds of entrepreneurs and business leaders as an editor at Entrepreneur.com and Green Entrepreneur. He is now editor for contributed content at Grit Daily News.

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