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The ESIGN Act and the UETA under the Microscope

Regulations like the ESIGN act (The Electronic Signatures in Global and National Commerce Act) and the UETA (The Uniform Electronic Transactions Act) in the USA have helped other countries move in the right direction. With all the legal backing, digital signatures can do what they do best – help businesses go paperless, save time, money, and a lot of infrastructural costs. Let’s take a closer look at these regulations and dive deep into details.

The ESIGN Act

The ESIGN Act was passed on 30th June 2000, by the Clinton government. This law granted validity to electronic records and signatures in online transactions, be it interstate or foreign trade. To enforce the law uniformly, some basic hardware and software requirements have been set forth. Apart from those, there are some major checkboxes that electronic signature applications need to tick to obtain legal validity.

  • The electronic signature is legally valid if the intent to sign from all the signing parties is clear.
  • The electronic signatures should associate the signatures to the electronic record in a secure manner.
  • The electronic signature application should preserve the identity of the signing parties.
  • The electronic signature software should maintain a log of all the transactions, which should be available for the signing parties at all times. 

Once these conditions are met, the electronic signature application can be deemed legit. These rules cover most of the scenarios that in turn, have helped save tons of paper. In the USA alone, the annual amount of paper consumption is enough to build a 10 feet-tall wall spanning from New York to Tokyo! Digital Signatures can help save around 837 tons of paper and more than 14,000 trees by offering features like online document archival. Besides having their uses, there are some exceptions to the ESIGN Act.

The Exceptions:

  • Paperwork associated with transportation of potentially dangerous material.
  • Divorce, wills, adoptions as per the family law.
  • Rental notice.
  • Testamentary trusts.
  • Court notices and official court documents. 

Also read: Digital signature laws around the world

The UETA

The Uniform Electronic Transactions Act (UETA) was enacted in 1999 to grant legality to electronic signatures in online transactions. This might lead to a common misconception that it is identical to the ESIGN Act. But it’s not! So what is the big difference?

The distinction between the UETA and the ESIGN Act

The ESIGN Act is a federal law consistently enacted across all the states, while the UETA is passed on a state-by-state basis. It is adopted by 47 states across the US. The three states that haven’t adopted UETA and have their laws and regulations are Illinois, New York, and Washington. Illinois has the Electronic Commerce Security Act, New York has the Electronic Signatures and Records Act, while Washington has adopted a similar law called the Electronic Authentication Act.

Laws like the ESIGN Act and the UETA are massive strides in the right direction. Such regulations pave the path to a brighter, smarter, and digital tomorrow, and help companies go paperless. Seeing such laws being passed worldwide paints an optimistic picture of a sustainable and efficient future for administrative bodies and organizations.

Sources:

https://www.ntia.doc.gov/files/ntia/publications/esignfinal.pdf

https://www.fdic.gov/resources/supervision-and-examinations/consumer-compliance-examination-manual/documents/10/x-3-1.pdf

https://www.faxcompare.com/blog/much-paper-can-digital-services-save

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