Are Electronic signatures accepted by law?
E-signature software has been accepted in general for over 20 years, thanks to the U.S. Electronic Signature Solutions in Global and National Commerce Act (ESIGN) in 2000 and the Uniform Electronic Transactions Acts (UETA).
These enabling statutes allow courts to not invalidate contract process paper documents simply because they are in electronic form. However, this does not mean that electronic signatures or digital signature tools will always be accepted in a wide range.
Covid-19 has allowed increasing its acceptance of digitally signed documents. Although individual situations may differ, Law accepts these legal documents as signed digital certificates by an authorized electronic signature provider.
The Following Documents can be Signed Digitally by Electronic Signature:
- Bonds (where Obligee has expressly authorized it)
- Vendor Engagement Electronic Contracts
- Non-disclosure agreements
- Collateral Agreements
- Subordination Agreements
- Co-surety agreements
- Some Indemnity agreements
- Claim digital documents
Some indemnity agreements can be used digitally for the signing process, such as for commercial transactions and where a wet ink signature field will follow (e.g.
during COVID-19 or lockdown). Indemnity agreements may not be suitable or appropriate for electronic signing or digital signature solutions for customer experience due to two main reasons: the power-of-attorney provisions and the local court rules, especially in the bankruptcy context.
A lot of indemnity agreements include an attorney-in-fact provision. This is an important electronic signature tool, especially when it comes to mobile device contract construction cases.
State law governs the requirements and basic plan for an attorney-in-fact provision. E-signature capabilities in each state have their own rules and regulations regarding the layer of security that constitutes a valid power of attorney grant.
Some states require E-signature field notarization, while others require the level of security witnesses and notarization.
These witness and notary requirements used to require that witnesses and parties had to physically be present. Due to the difficulties in today's environment, states have rushed online forms to create remote notary statutes that allow remote two-way audio or visual software advanced features to notarize electronic document workflows.
However, not all states have done this and in many cases, there is still a requirement for a physical witness.
The Key Takeaway
Contract accounts are subject to wet signatures until there is consistency among states in terms of attorney-in-fact provisions and witness E-signature solution.
There may be exceptions outside the contract space. These should be discussed with the appropriate home-office underwriting business team to conduct a case-by-case evaluation.
Electronic signatures are encouraged, provided that the business document management is in compliance with the vendor's approval.
