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Are Digital Signatures Legally Binding?

Not that long ago, the only way to verify your agreement with a contract or statement was to physically drag a pen across paper. Although ink signatures are still broadly used today, digital signatures have grown in popularity over time, and are recognized by laws in the United States and in many other countries.

In addition to providing security, convenience, and ease of documentation, digital signatures enable anyone with an internet connection to sign documents remotely, which is especially useful in a time of social distancing. The following information will help you understand the validity and legal enforceability of digital signatures.

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When are digital signatures legally binding?

U.S. federal law recognizes digital signatures as being valid as long as they comply with certain standards. These are:

  1. Intent to sign – Just as with traditional signatures, digital signatures are not legally binding if either party didn’t intend to adopt the terms associated with the signature. Basically, one party can’t “trick” the other party into signing something they had no intention to sign.
  2. Consent to electronic transaction Each party must agree to use digital signatures and records after receiving specific disclosures about the process (e.g., “By clicking here, you agree to the terms of this document.”)
  3. Association of digital signature with the agreement or record Any digital signature must be directly associated with the record being signed
  4. Clear attribution – The signature should be clearly attributable to the person who made it. 
  5. Retention of records – All parties to a digitally-signed contract or statement must have access to its records and be able to accurately reproduce the document(s) for reference.

What are the laws that govern digital signatures?

There are two laws governing digital signatures in the United States:

  • Uniform Electronic Transactions Act (UETA) – A law that serves as a model for states to pass if they so choose.
  • Electronic Signature in Global and National Commerce (ESIGN) Act – A federal law that creates a nationwide standard.   

The UETA was adopted by 47 states and the District of Columbia and establishes the legality of digital signatures as being just as valid as ink-and-paper signatures. New York, Illinois, and Washington chose not to adopt the UETA, but they have their own statutes recognizing digital signatures. UETA only covers business, commercial, and governmental matters. This excludes wills, trusts, family law matters, and many other important legal procedures.

The ESIGN Act is similar to UETA in that it affirms the legal validity of digital signatures. The factors required for a digital signature to be legally binding are governed by this law. (See: When are digital signatures legally binding?)

The ESIGN Act is also limited to business, commercial, and governmental matters. This means ink signatures are still required for: 

  • estate and family law matters 
  • court orders, pleadings, motions, and other court documents 
  • notices of foreclosure, eviction, or repossession 
  • cancellation notices, such as utilities or insurance benefits 
  • safety recall notices.

Are digital signatures legally binding outside of the United States?

It depends on the country. Some countries have more flexible and open-ended digital signature laws, while others have more rigid requirements.

Federal and state laws in the United States do not require the use of any particular technology, nor do comparable laws in Canada, the UK, and Australia. But members of the EU, South Korea, and China have adopted laws that—in addition to defining the types of regulations found in the ESIGN Act—specifically create a list of approved technologies and processes.

This does not necessarily mean that you need to worry about using a specific technology or process for digital signatures if, for example, one of the signees is based in Europe or China. Most of these laws allow private parties to enter into a digital agreement using the technology and process of their choice.

But some countries are more particular about the technology and methods used for digital signatures, including Brazil, India, and Israel. In these countries, digital signatures that do not comply with the mandated technology or process may not be legally binding. If you have questions about your specific situation, it is best to talk to a lawyer.

Make your contracts legally binding

Even before COVID-19 put face-to-face interactions on hold, digital signatures were being widely adopted as a more convenient and efficient way to sign documents. RocketSign provides an innovative, end-to-end solution for your online transactions. Declare your independence from the hassle of ink signatures today!

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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