The UETA and ESIGN Act: Best Practices for Compliant E-Signatures

Helpful Summary

  • Overview: We give you an in-depth overview of the UETA and ESIGN Acts and explain how you can ensure that your electronic transactions and signatures stay compliant. 
  • Why you can trust us: SignWell is an e-signature tool that integrates the compliance criteria from both laws (UETA and ESIGN) into our e-signing platform. Clients like Intro CRM and ConveYour use SignWell to get their contracts signed and keep up with US standards. 
  • Why this is important: Complying with UETA and ESIGN means your contracts are more sound in the event of a lawsuit. That means fewer fines, disputes, and headaches.
  • Action points: Create a SignWell account to ensure that all your agreement documents meet the criteria for validity in the United States and worldwide.
  • Further research: Once you’ve set up your SignWell account, explore our UETA and ESIGN-compliant features and streamline your e-signing process.

Confused About UETA and ESIGN?

In the US, electronic signatures are only considered valid when they comply with: 

  • the Uniform Electronic Transactions Act (UETA)
  • the Electronic Signatures in Global and National Commerce Act (ESIGN Act)

Understanding these laws is a key first step in compliance. And compliance is the only way to guarantee that your transactions and contracts are legally binding. So, in this SignWell guide, we’ll break down the basics of UETA and ESIGN compliance to help you understand what it means for your business.

But first…

Why Listen to Us?

SignWell is used by over 61,000 businesses worldwide. We know what people want from an e-signature solution and are familiar with local and international regulatory requirements needed to ensure contract validity.

What Is UETA?

The Uniform Electronic Transactions Act (UETA) is a US law that governs the use of electronic signatures and records in interstate transactions. So far, it has been adopted by 49 states—New York chose to enact a separate (but very similar) statute called the Electronic Signatures and Records Act (ESRA)

It’s also worth highlighting that the UETA isn’t a federal law.

UETA was proposed to ensure electronic records (like e-signatures) hold the same weight as traditional paper records and to establish standards for their use.

According to UETA, an e-signature is valid only when it meets these four criteria:

  1. The intent of the signer to sign the record electronically must be evident.
  2. Both parties consented to doing business electronically.
  3. The e-signature is associated with a specific record.
  4. All parties can access the signed document.

What Is the ESIGN Act?

The Electronic Signatures in Global and National Commerce Act (ESIGN Act) is a US law that also regulates electronic signatures and records.

Why are there two laws?

As we mentioned earlier, UETA isn’t a federal law, so states can choose whether they want to adopt it or not. The ESIGN Act, on the other hand, is a federal law. That means it applies to both national and international transactions.

The ESIGN Act was enacted by the United States Congress on June 30, 2000. Its primary purpose is to promote the efficiency, accessibility, and reliability of electronic transactions. The ESIGN Act also includes policies ensuring customer data is only accessible to authorized individuals.

What’s the Difference Between the UETA and ESIGN Act?

Both the UETA and ESIGN Act work to ensure that digital signatures get the same legal recognition as physical signatures in the US. Yet, they are distinct in the following ways:

  • The UETA is a state-by-state regulation, while the ESIGN Act is a federal law. This means that US states decide whether or not to adopt the UETA while the ESIGN Act is mandatory.
  • The UETA does not have jurisdiction over international transactions, but the ESIGN Act does. So, if you’re a non-US entity dealing with a US-based business or individual, the ESIGN Act is the more important standard to know about.

Here’s a table to summarize the similarities and differences:

UETA

ESIGN Act

Purpose

Facilitate electronic transactions by providing a legal framework for electronic signatures and records.

Promote electronic commerce by removing legal barriers to the use of electronic signatures and records.

Enactment Date

1999

2000

Scope

Applies to electronic transactions at the state level.

Applies to electronic transactions in interstate and foreign commerce.

Consent Requirement

Requires parties to consent to conduct transactions electronically. 

Requires explicit consent from parties to conduct transactions electronically but allows for opt-out provisions.

Applicability

Generally applies to transactions between US-based parties.

Applies to transactions conducted in interstate and foreign commerce.

Validity Criteria for E-Signatures

Intent to sign, consent to do business electronically, association with the record, record retention

Intent to sign, consent to do business electronically, association with record, attribution, opt-out clause, record retention

Consumer Protection

Includes provisions for consumer protection, such as requirements for consent and retention of records.

Includes provisions to protect consumers’ rights and interests in electronic transactions.

Legal Recognition

Recognizes electronic signatures and records as legally valid and enforceable.

Establishes the legal validity and enforceability of electronic signatures and records.

Uniformity

Provides a model law for states to adopt, resulting in variations in implementation across jurisdictions.

Establishes consistent rules for electronic signatures and records across states and jurisdictions.

Criteria for Validity of E-Signatures Under the UETA and ESIGN Act

To be considered valid under the UETA and E-Sign Act, an electronic signature must meet certain criteria, including:

  1. Intent to sign: The electronic signature must be created with the intent to sign the electronic record. This ensures that the signer voluntarily adopts the electronic signature to authenticate the transaction. Translation—the person signing must understand that they are signing an electronic document.
  2. Consent: The parties involved must consent to the transaction. This may include obtaining informed consent from the parties or providing them with the option to opt out of the transaction. Translation—both parties must agree to use electronic signatures in place of traditional paper signatures.
  3. Association with the record: The electronic signature must be logically associated with the electronic record, indicating the signer’s approval or acceptance of its contents. This ensures that the signature uniquely identifies the signer and links them to the specific transaction. Translation—the electronic signature must be connected to the document being signed.
  4. Record retention: The electronic signature record must be retained and accurately reproduced so that all contract stakeholders can reference it at any time. Translation—you need to send copies of the electronic signature record to all parties involved and keep a record of the transaction.

Why Should You Care About the UETA and ESIGN Act?

UETA and ESIGN Act Are Legal Requirements

The most obvious reason to care about UETA and the ESIGN Act? They’re legal requirements. Both acts establish the legal validity and enforceability of electronic signatures and records, meaning they hold up in court just like traditional paper documents.

Non-Compliance Can Be Penalized

Complying with the UETA and ESIGN Act helps you avoid potential penalties and legal liabilities. If you fail to follow these laws, you could face fines, legal fees, and damage to your business reputation.

The only way to protect yourself, your business, and your transactions is to comply with these laws.

5 Best Practices for Compliance with the UETA and ESIGN Act  

1. Choose a Compliant E-Signature Tool

The first and most important step for compliant electronic transactions is choosing a compliant platform.

Looking for an e-signing tool? SignWell is a secure, user-friendly, and affordable e-signature solution that complies with the UETA and ESIGN Act. We help you collect legally binding signatures at scale with helpful features like templates, automatic reminders, and more.

SignWell Compliant E-Signature Tool

But what’s relevant here are our security and compliance features.

We offer:

  • Legal compliance: SignWell complies with UETA, ESIGN, eIDAS, HIPAA, SOC 2 Type 2, ISO 27001, and GDPR.
  • Encryption: All data is encrypted in transit and at rest to ensure the security of your transactions.
  • Audit trails: SignWell provides comprehensive audit trails that track every step of the e-signing process, including who signed the document, when it was signed, and any changes made.

All of this means that your e-signature transactions are legally binding in the US and internationally by default.

2. Get Consent From All Parties Involved

Consent is a hugely important part of this process. In highly litigious countries like the US, it’s essential to have proof that all parties involved in an e-signature transaction:

  • Understand that they are signing a legally binding document
  • Agree to sign the document electronically
  • Consent to use electronic signatures instead of traditional paper and ink

The easiest way to get this consent is with a short disclaimer that precedes the e-signature process—something like:

By signing this document electronically, I agree to the use of electronic signatures and understand that my signature carries the same legal weight as a traditional paper and ink signature.

A simple line like this could be the difference between a legally valid contract and one that could be disputed in court. So, whenever you use e-signatures, make sure to include some form of consent language beforehand.

3. Monitor Compliance Trends Regularly

Staying informed about compliance regulations and emerging trends is essential for maintaining compliance with UETA and the E-Sign Act.

Here are two websites to check for compliance regulations:

The benefit of using a compliant e-signing tool like SignWell is that we take care of the boring, but necessary, compliance details for you. All you need to do is focus on growing your business and providing excellent service to your clients and customers.

4. Ensure the Security of Signer Data

Whenever you collect data from your customers or clients, it is important to ensure the security and protection of that data. This applies to e-signatures as well.

Make sure that the e-signing platform you use has strong security measures in place, such as encryption and secure document storage. At SignWell, we take the security of our users’ data very seriously. All signed documents and personal information are encrypted when stored using the AES-256 encryption standard, which is used by the US government to protect confidential information. 

5. User Training and Support

Customer and employee support is non-negotiable if you want valid electronic transactions. Human error is a common cause of problems when using e-signatures, so it is important to provide adequate training and support for all users.

That’s why SignWell offers comprehensive customer support services, including Zoom calls, email support, phone support, and extensive documentation. We also have a resource center for employees and customers to understand the legal requirements of electronic transactions.

Keep Your Business Compliant 

Complying with UETA and ESIGN is a must if you want your electronic transitions to withstand scrutiny in the US. Luckily, compliance is simple if you use the right e-signature software.

SignWell is fully compliant with both UETA and ESIGN. Plus, we help you cut turnaround times with time-saving features like templates, integrations, and automated reminders. All of this contributes to a secure, efficient document management workflow.

Want to learn more? Sign up for SignWell and start sending compliant electronic documents.