Electronic Signature Law and Legal Definition

Under the federal Electronic Signatures in Global and National Commerce Act, "digital contracts" that consumers agree to online have the same legal status as pen-and paper contracts. The Act defines an electronic signature as an electronic "sound, symbol, or process" attached to a contract or other record which was "executed or adopted by a person with the intent to sign the record."

Online contracts are made for a variety of business transactions, such as purchasing a car, buying an insurance policy, or closing a mortgage. The law allows businesses to satisfy their obligation to provide legally required notices to customers by sending those notices electronically, once the consumer provides consent for such online communication. If a consumer wants to revert to paper notices, the law permits the business to charge a fee, as long as the fee was disclosed when the consumer first consented to electronic notice.

The federal law allows its consumer protections to be displaced by state law if a state enacts the Uniform Electronic Transactions Act (UETA). The federal law contains stronger standards for consent, disclosure, and document tampering than UETA, which some states have already passed.

The following is an example of a state statute dealing with electronic signatures:

"(a) This chapter does not require a record or signature to be created, generated, sent, communicated, received, stored, or otherwise processed or used by electronic means or in electronic form. (b) This chapter applies only to transactions between parties each of which has agreed to conduct transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties' conduct. (c) A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. The right granted by this subsection may not be waived by agreement. (d) Except as otherwise provided in this chapter, the effect of any of its provisions may be varied by agreement. The presence in certain provisions of this chapter of the words "unless otherwise agreed," or words of similar import, does not imply that the effect of other provisions may not be varied by agreement. (e) Whether an electronic record or electronic signature has legal consequences is determined by this chapter and other applicable law."