Everything you need to know about e-signature laws

What Is an Electronic Signature?

An esignature is a digital form of signature or a symbol/ sound/ typed name which is attached or used as a signature by the concerned signatory on a contract or file to indicate or confirm that the signatory has signed the doc with full consent.

People perform e-signature in different ways. As a signature can be anything from the symbol, sound, or digital signature, a signer can sign his/her name into the signature area, or paste a scanned signature, and check into the "I accept" box, to affirm that he/she has signed the particular document/file.

There are many ways of signing a document, but only some of them are secured and stand no chance of getting lost, forged, or misused. Most of the people in the market agree on the use of 

“electronic signature” as the most secure one. Digital signatures use digital identification to validate the signer. This signature then gets connected to the document through encryption. A reliable electronic signature software provides all this and more to make users’ experience secured, legally acceptable, and smooth. A few laws are governing digital signature or electronic esignature. Let us look at some of these laws in brief:

Federal and State Electronic Transactions Laws

The US Federal legislation enacted ESIGN in 2000. ESIGN, that is the Electronic Signatures in Global and National Commerce Act covers almost every e-contracts and e-signatures valid and just, similar to traditional wet-ink signatures and paper contracts. Similar to the federal law there are state laws that every solution provider has to keep it in mind depending upon the type of industry he/she is serving. It can be eSignature Healthcare Solutions or the one for the banking sector or legal agreements etc. All the states have either adopted the Uniform Electronic Transactions Act (UETA) or they have passed their own laws establishing and defining the legality of esignatures and contracts. 

What Is an Electronic Contract?

An e-contract is an agreement or a contract developed and signed (as explained before) in an electronic form, a digital contract. An electronic contract is the one you write on your computer, with all the required information and authentication measures, and share it with the concerned party for signature through email. The other party signs it and shares it back to you in an electronic form. 

Another form of an e-contract is a "click to agree" contract which we usually come across while downloading software and installing it. Here, the user clicks the "I agree" button on a form agreeing to the terms and conditions of using and installing the particular software or to complete the transaction.

E-Signature and E-Contract Requirements

As per the esignature laws and regulations, namely ESIGN, UETA, and state laws, individuals and businesses have to follow specific instructions and measures to adhere to the laws while creating e-contracts and esignatures. Usually, these measures include the following procedures or actions:

Signers must be in consent:

Every concerned signer has to give consent to an e-contract and performing esignature in most of the cases signatory can you show the consent by responding to the email affirmatively. In simple words, if you are the concerned signatory, all you have to do is acknowledge the email in which you have received an e-contract to sign. In some cases, the law might demand an agreement mentioning that the business or the transaction will be conducted electronically.

Singers must know what the signature means:

The document creator has to inform and educate the signer that signing the agreement in any way would be indicating that the signer agrees with the terms and condition/clause/data mentioned in the agreement. 

Give signers other options. 

E-signature laws emphasized the use of paper as an unnecessary arrangement in many situations, but sometimes, the parties are allowed to use papers. As per most of the esignature laws, if anyone is willing to use the paper to create a contract, the parties will be out of esignature regulations.

Inform signers that their consent is withdrawable. 

Signers of the concerned document can withdraw their consent to use electronic documents or signatures anytime by sharing a proper reason behind their decision.

Keep copies of the documents. 

The party who has created the contract has to keep a copy of the signed contract and share it with the concerned signatories. The party can share the link to the copy with the concerned signatories.

Contracts That Must Be on Paper

Not every contract/agreement can be created and signed electronically under the ESIGN Act. The act mandates certain agreements to be in the traditional form of paper and wet ink. ESIGN Act excludes the following from ts governance:

Wills, testamentary trusts documents that are related to family law matters.

Court documents.

Notices to cancel/ terminate utility services, etc.

However, even though ESIGN does not accept esignatures for these documents, some states have passed laws that allow e-signatures (for those exempted from ESIGN) under specific circumstances. For example, a number of courts esignature on pleadings and motions when certain court procedures are followed. 

Let us understand the regulation for E-Signature For Legal Agreements

The esignature industry has been witnessing rapid advancement that has revolutionized prominent sectors of the global economy such as finance, real estate, banking, insurance, and commercial dissimilar growth and impact can be witnessed in one more sector where huge paperwork and documentation is unavoidable and mandatory. 

That sector is legal agreement However, thanks to technological development, the legal agreement sector is adopting and integrating the use of digital signatures to bring smoothness and in-time delivery of daily transactions. Digital signatures allow you to achieve improved efficiency.

Read the blog- eSignly eSignature API for healthcare processes with full legal compliance that your users will love

Regulations & Compliance

If you are in any way associated with the legal sector, you might have some concerns and doubts about the legality in terms of digital signatures. Law firms that deal with higher risks need to be extra careful and alert while managing the day-to-day work issues, especially those which are legally complicated, such as esignatures. Law firms that avail reliable Electronic Signature software/solutions can feel assured of the total security and legal compliance, and privacy measures. Digital signature solutions would save you from time-taking manual work, administrative costs, and slow procedures.

A few regulations are governing E-Signature For Legal Agreements. They are:

e-IDAS regulation (electronic IDentification, Authentication, and trust Services): 

This EU regulation provides a set of specific rules and acceptance to e-signatures and e-IDs.

UETA and ESIGN Act:

These acts affirm that the digital signatures hold the same value and authority as physical/wet ink signatures on paper documents or files. The authenticity and value of the signature cannot be denied just because it is in an electronic form.

Electronic Signatures for Banking 

The banking sector is changing swiftly and the focus is shifting from the traditional way of banking to the technology-led banking system. Digital solutions for banking are being integrated into face-to-face banking. Apart from document scanning services, the banking sector is welcoming e-signatures and contracts too. 

The objective is to improve customer relations and proceed faster. There are a number of transactions such as opening bank accounts, applying for loans, investment documents, etc that need to be signed. Adopting e-signatures speeds up the transactions, reduces the costs, and improves customer satisfaction. Considering the COVID-19 pandemic, the integration of any contactless solution would be a plus point for the banking institution.

eSignature Healthcare Solutions

Just like the banking sector or any other sector of the economy, the healthcare sector also believes in updated technology, digitization, and the use of eSignature Solution for Healthcare Professionals. Regulations like HIPPA by the federal government allows the healthcare sector to use electronic signatures under the laws mentioned.

The Healthcare sector deals in piles of abundant paperwork that needs to be signed, documented, stored or shared to multiple entities, regularly. Time, accuracy, and security, all this has to be minded while conducting the procedures. Tempering data or forgery cannot be tolerated here. 


Confidential documents such as the patient’s admission form, agreement, medical prescription, etc, need to be signed and stored well. A reliable digital signature solution is ideal to take care of these measures. 

Some of the rules and regulations that govern esignatures across the sectors for the mentioned countries:

Australia: 

Electronic Transactions Act 1999

United States:

Electronic Signatures in Global and National Commerce Act

Uniform Electronic Transactions Act

United Kingdom: 

Electronic Communications Act 2000

Electronic Signatures Regulation 2002

EU: 

European Directive 199/93/EC

Canada: 

Personal Information Protection and Electronic Documents Act

India: 

Information Technology Act of 2000

Many countries in the world allow electronic signatures and have formed their own rules regarding the same.

Conclusion:

Signatures if made in the electronic form are easy to use and secure. They are relatively safe from forgery, misuse, theft, or any other illegal act where the signature can be used in the wrongdoing. Following the related laws of the land, every sector can integrate digital signature solutions in daily transactions.