E-Sign Act – Definition

Cite this article as:"E-Sign Act – Definition," in The Business Professor, updated November 22, 2018, last accessed November 26, 2020, https://thebusinessprofessor.com/lesson/e-sign-act-explained/.


E-sign Act – Definition

The Electronic Signatures in Global and National Commerce Act (E-sign Act) enables businesses and individuals to sign contracts and documents digitally. The E-sign removes the need to sign a paper contract for the agreement to be enforceable. E-sign is officially known as The Electronic Signatures in Global and National Commerce Act.

A Little More What is the E-Sign Act

The E-sign Act was signed into law by President Bill Clinton in June of 2000. It has been in effect since that time.
Prior to passage of the E-sign Act, many business were reluctant to handle online transactions over concerns about the legitimacy or legal enforceability of such contracts.

The E-sign Act confirmed that individuals can sue each other in the event of breach or noncompliance with the terms of electronically-executed contracts.

The E-sign Act avoided negative consequences associated with the inconsistencies between state laws. Many states have their own regulations for electronic signature. Many states have adopted the Uniform Electronic Transactions Act (UETA) in whole or part.

The E-Sign Act exempts the following types of legal documents from coverage:
• Wills, and trusts
• Adoption paperwork
• Decree relating to divorce etc.
• Some Articles of the Uniform Commercial Code
• Judicial orders and notices
• Official court documents
• Termination notices to utility services.

As such, state law solely controls electronic signatures on these documents.

References for the E-Sign Act

Academic Research on the ESign Act

  • Digital signatures and global e-commerce: Part I-US initiatives, Stephens, D. O. (2001). Information Management35(1), 68. This article discusses the execution of legal business transactions using digital signatures rather than physical or paper signatures as a milestone in the expansion of global E-commerce. The federal government has mandated that by October 2003 all agencies should convert their documents into electronic formats to facilitate the use of digital signatures. The use of electronic formats in contractual agreements helps to lower transaction costs and enhance productivity.
  • The ESign Act of 2000: the triumph of function over form in American Contract Law, Hays, M. J. (2000). Notre Dame L. Rev.76, 1183. Congress believed that E-sign stands as a well-calculated approach to promote the development of e-commerce, hence they drafted a law that will certify the advancement of internet and electronic transactions. The law’s provisions allow a proper balance to exist between function and form and provides a flexibility that allows changes and modifications of the law over time. This paper describes the entire process of how the Electronic Signature Act was passed by Congress.
  • The ESign Act: the means to effectively facilitate the growth and development of E-Commerce, Zemnick, S. R. (2000). Chi.-Kent L. Rev.76, 1965. This paper explained that the development of commerce will occur in form digital transactions and electronic communications rather than paper transactions. The legal issues highlighted by the electronic society is solved by the E-sign act by permitting electronic formats to have the same legal effect, acceptability and enforceability as paper.
  • The electronic signatures in global and national commerce act, Stern, J. E. (2001). Berkeley Technology Law Journal, 391-414. The technology-neutral nature of electronic signatures exempts them from being restricted to the use of a particular technology in making contracts. On the discovery of new technology, E-sign can be modified to work with it. However, this neutral nature may result in the use of outdated and insecure networks in making contracts promoting fraudulent activities. Legislators have proposed the use of Certification Authorities to shoulder the loss as a means of curbing fraudulent activities.
  • Uniform Electronic Signatures in Global and National Acommerce Act: Removing Barriers to E-Commerce of Just Replacing Them with Privacy and Security Issues, Roland, S. E. (2001). Suffolk UL Rev.35, 625. Electronic signatures have been a major block to the development of e-commerce. A bill was passed to solve the problems associated with E-signatures, the bill ensures that all electronic signatures have the same legal authority as paper signatures. The bill will promote e-commerce by giving clients the assurance that their transactions are safe.
  • Electronic Contracting in Delaware: The ESign Act and the Uniform Electronic Transactions Act, Denny, W. R. (2001). Del. L. Rev.4, 33. With the explosive rise of e-commerce over the past decade, the need for the law to adapt to the use of E-sign as a means of transaction is quite necessary. This article will discuss the provisions of the state and federal legislation concerning Electronic Signatures in Global and National Commerce Act (“E-sign”) and the Uniform Electronic Transactions Act (“UETA”) which was adopted in Delaware on July 14, 2000.
  • Does ESign Preempt the Illinois Electronic Commerce Security Act, Splinter, J. A. (2002). S. Ill. ULJ27, 129. Illinois Electronic Commerce Security Act6 which was enacted on July 1, 1999, serves to promote the rise of e-commerce. After about a year, the Electronic Signatures in Global and National Commerce Act (“E-sign”) was enacted on the 30th of June 2000.
  • E-Sign Act: A Move in the Right Direction and a Boost for E-Commerce, The, Van Horn, D. W. (2001), The. Tenn. BJ37, 14. A lot of business transactions are now carried out with the use of electronic signatures. This article highlights the positive effect electronic signatures have had on the rise of e-commerce over the past decade. It discusses the E-sign act and its provisions that increase the acceptability and legal authority.
  • “Clicks and bricks”:: e-Risk Management for banks in the age of the Internet, Pennathur, A. K. (2001). Journal of banking & finance25(11), 2103-2123. Due to the demands of clients for an online presence in the banking industry, banks now follow an online “clicks and bricks” strategy. This has multiplied the operational, legal, security and reputation risk faced by banks. A creative and foresighted approach, which is quite different from the traditional self-regulatory approach is necessary to tackle the risks.
  • E-sign: Paperless Transactions in the new Millennium, Domanowski, S. (2001). DePaul L. Rev.51, 619. The application of electronic transactions has led to core changes in contract law. These changes catapulted the present legal system into the future (new millennium). The only major requirement of the law is that both parties to the transaction mutually consent to the use of electronic signatures and records. With the legal changes adopted, electronic contracts have the same validity, enforceability, and acceptance as paper transactions.

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