ESIGN is 19! Time to reflect on electronic signature in the U.S.

June 30, 2019 marked 19 years since the Electronic Signature in Global and National Commerce Act (ESIGN) was signed into law--as well as the 10th annual National ESIGN Day in the U.S.

Nineteen is a funny, in-between age: already old enough to drive, vote, and (yes) sign contracts, yet still not old enough to get into the really good clubs. It's a good age, however, for reflection: a time to consider one's beginnings, how one is perceived, and what one's future may hold.

So, let's briefly reflect on 19 years of ESIGN.

Why ESIGN was created

ESIGN established a consistent foundation across the U.S. for legal agreements in the age of electronically enabled commerce. Its core principles derived from its state-level predecessor, the Uniform Electronic Transactions Act (UETA), which gave the states a model to avoid passing well-intended but inconsistent e-signature laws that could have ultimately hindered innovation.

ESIGN took the bold, simple approach of establishing a uniform standard for electronic signatures on a preemptive basis: not only would it govern interstate and foreign commerce, but it would also override any non-UETA state law conflicting with its provisions. (Message to state legislatures: "Stray from UETA at your peril; if you do, ESIGN will prevail!")

Technology-neutral, ESIGN declared no legal preference for any particular type of e-signature. Rather than dictate special provisions to prove the identity of signatories, it simply established the legal equivalency of electronic and wet signatures, and left it to the courts to evaluate supporting evidence as needed.

The effect was potent: ESIGN set the stage for innovative development of e-signature solutions and, thus, for commerce to flourish over the last two decades. Its flexibility allowed for the development of a wide range of technologies to authenticate signers, which can be leveraged by businesses to the degree they deem necessary.

ESIGN carves out certain use cases—such as wills, estate documents, court filings, terminations of life or health insurance, and some transactions that fall under the Uniform Commercial Code—deferring to other state and federal laws to determine the applicability of e-signatures for those scenarios. Beyond those few carve-outs, however, it firmly establishes that a signature "may not be denied legal effect, validity, or enforceability solely because it is in electronic form."

ESIGN also balanced consumer protection concerns of the day by adding consumer disclosure requirements that UETA didn't contain, ensuring that businesses affirmatively secure and record consent from consumers before contracting electronically with them.

How ESIGN has been interpreted

ESIGN has spurred a worthy body of instructive case law as well as numerous judicial mentions. A recent search in LexisNexis yielded 166 total cases referencing ESIGN (also known to its friends as 15 U.S.C. 7001 et seq.), including 119 opinions from district courts, 14 from federal appeals courts, and 29 from state courts.

We've seen the technology neutrality of ESIGN and UETA play out in court opinions evaluating the evidence attributing a signer to an electronic signature; often these cases demonstrate how powerful an e-signature audit trail can be even in the face of allegations of forgery.

We've also seen opinions that:

• Highlight the importance of securing consumer consent to contract electronically
• Underscore the need to maintain post-signature records with integrity
• Interpret and enforce local court rules about signing court documents
• Help define best practices to ensure the enforceability of "clickwrap" agreements

Interestingly, very few courts have had to consider whether ESIGN actually preempts a non-conforming state e-signature law, and none has gone so far as to enforce such preemption. This is largely due to the fact that 47 states have adopted UETA, most without amendments that would create notable conflict with ESIGN.

DocuSign has surveyed all reported U.S. cases where the court indicated that the DocuSign eSignature service was used. In no such ruling has a DocuSign signature been denied the same legal effect as a wet signature for any use case covered by ESIGN. Download the white paper.

Where ESIGN will help us go next

Though technically still a teenager, ESIGN has compelling guidance for the federal government. Signed into law in December 2018, the 21st Century Integrated Digital Experience Act ("21st Century IDEA") requires all executive agencies to "accelerate the use of electronic signatures standards established under [ESIGN]," with tight timelines for them to deliver plans to Congress and the Office of Management and Budget detailing how they will do so.

Drafted with prescient care, ESIGN should continue to serve us well as agreement technology advances. For example, today's bright spotlight on blockchain is also calling attention to smart contract code for its valuable ability to automate key aspects of agreements. States legislatures that have been looking to pass laws to recognize smart contracts should take notice that ESIGN and UETA already provide a legal foundation for them—establishing that "electronic agents" can legally create and execute enforceable agreements as long as their actions are attributable to the person to be bound.

So, Happy 19th, ESIGN! You're maturing respectably into your post-teenage years and—with your continued support for innovation—the future of agreement technology looks bright indeed.

To view the original article, visit the DocuSign blog.