The ESIGN Act Explained

What is the ESIGN Act?

The Electronic Signatures in Global and National Commerce Act (Public Law 106-229) was passed by Congress and signed into law on June 30, 2000. Most of it took effect on October 1, 2000. It lives in Title 15 of the U.S. Code, sections 7001 to 7031.

It was written to solve one problem: state laws on electronic signatures were a patchwork, and businesses couldn't be sure an online contract would hold up in another state. ESIGN set one national floor. It applies to any transaction "in or affecting interstate or foreign commerce," which courts read broadly, so it reaches almost every commercial deal.

The key sections are few:

The general rule: § 7001(a)

This is the sentence everything else rests on:

"(1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and (2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation."

15 U.S.C. § 7001(a) · Official source

Note the word solely. ESIGN doesn't make every electronic contract valid. A contract can still fail for the usual reasons: no agreement, fraud, a missing term. What it can't fail for is the mere fact that it was signed on a screen.

And this is what counts as a signature:

"The term "electronic signature" means an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record."

15 U.S.C. § 7006(5) · Official source

What ESIGN does not require

• No specific technology. A finger-drawn signature, a typed name, a click or a PIN can all qualify. The law doesn't pick winners.
• No certificates or "levels." Unlike some other countries, U.S. law has no tiers of electronic signature.
• No one is forced to go electronic. ESIGN does not "require any person to agree to use or accept electronic records or electronic signatures" (§ 7001(b)(2)). If the other side wants paper, they can insist on paper.
• It doesn't change your other obligations. ESIGN doesn't alter the content or timing of any disclosure another law requires (§ 7001(c)(2)(A)), and it leaves other legal requirements in place except the need for paper or a handwritten signature (§ 7001(b)(1)). It only lets you deliver them electronically.

Consumer consent: § 7001(c)

This is the part businesses most often get wrong, and the part that's easiest to over-apply. It applies only when both of these are true:

1. The other party is a consumer: someone getting products or services "primarily for personal, family, or household purposes" (§ 7006(1)).
2. Another law requires that certain information be provided to them in writing. Think loan disclosures, insurance notices, some lease or warranty terms.

In that case, an electronic record satisfies the "in writing" requirement only if the consumer has "affirmatively consented" and, before consenting, received a clear and conspicuous statement covering:

• their right to get the record on paper, their right to withdraw consent, and any conditions, consequences or fees if they do;
• whether the consent covers just this transaction or a category of records;
• how to withdraw consent and how to update their contact details;
• how to request a paper copy after consenting, and whether it costs anything;
• the hardware and software needed to open and keep the records.

The consumer must also consent electronically, or confirm consent electronically, "in a manner that reasonably demonstrates" they can access the information in the format you'll use (§ 7001(c)(1)(C)(ii)). The simplest way: put the disclosure and an "I agree" step inside the same electronic flow they'll use to sign.

One safety valve: a consumer contract is not invalid "solely because of the failure to obtain electronic consent or confirmation of consent" in that demonstrable way (§ 7001(c)(3)). But that doesn't excuse skipping the disclosure itself.

If neither condition applies, as with most business-to-business contracts, NDAs, quotes or permission slips, § 7001(c) doesn't apply and the ordinary rule is enough: signing shows intent.

Record retention and notarization

When a law requires a contract to be in writing, the electronic version can be denied legal effect if it isn't "capable of being retained and accurately reproduced for later reference" by everyone entitled to keep it (§ 7001(e)). So send each signer a copy of the signed document they can download and store.

When a law requires a record to be retained, an electronic copy works if it accurately reflects the information and stays accessible (§ 7001(d)).

ESIGN also allows notarization to be done electronically: a notary requirement "is satisfied if the electronic signature of the person authorized to perform those acts" is attached together with all other required information (§ 7001(g)). It doesn't remove the need for a notary; it lets a commissioned notary act electronically where state law allows. See e-signature vs. notarization.

The exclusions: § 7003

ESIGN does not apply to a contract or record "to the extent it is governed by" the following:

"(1) a statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts; (2) a State statute, regulation, or other rule of law governing adoption, divorce, or other matters of family law; or (3) the Uniform Commercial Code, as in effect in any State, other than sections 1–107 and 1–206 and Articles 2 and 2A."

15 U.S.C. § 7003(a) · Official source

Section 7003(b) adds:

• court orders, notices and official court documents, including briefs and pleadings;
• notices of cancellation or termination of utility services (water, heat, power);
• notices of default, acceleration, repossession, foreclosure or eviction, or the right to cure, under a credit or rental agreement for a primary residence;
• notices of cancellation or termination of health insurance or life insurance benefits (excluding annuities);
• notices of a product recall or material failure that risks health or safety;
• documents required to accompany the transport or handling of hazardous materials, pesticides or other toxic materials.

"Excluded from ESIGN" doesn't always mean "must be on paper." It means ESIGN doesn't help you, and the specific law for that document decides. A growing number of states, for example, now allow electronic wills under their own statutes. More in which documents can't be signed electronically.

ESIGN and state law (UETA)

ESIGN generally preempts state law that's inconsistent with it, with one big exception in § 7002: a state may "modify, limit, or supersede" ESIGN by enacting UETA as approved by the Uniform Law Commission, or by passing other rules that are consistent with ESIGN and technology-neutral. Since 49 states and D.C. have adopted UETA, in most places UETA is the law you're actually working under day to day, with ESIGN as the backstop. New York uses its own law, ESRA. See what is UETA and electronic signature laws by state.

What it means in practice

For most people sending a contract, lease, NDA or form, ESIGN boils down to four things you should be able to show: the person intended to sign, they agreed to do it electronically, the signature is tied to that specific document, and everyone has a copy they can keep.

MultiDocs is built around those points. Before signing, the signer sees the full document and the notice that tapping "Send signature" means they agree to sign electronically, and they can decline. The signature is embedded in the PDF, and the last page is a certificate of completion with the date and time, the email or phone the link was sent to, the IP address, device and browser, a unique signer code and the document's SHA-256 fingerprint. Every signer can download the signed copy (MultiDocs deletes the document 30 days after signing and keeps only an evidence record for 5 years, so each signer should keep their copy), and anyone can check it at /verify. If your document is one where § 7001(c) applies, add the consumer disclosure to the document or your message: that part is up to you.

This is general information, not legal advice. For your specific situation, ask a lawyer licensed in your state.