Legal Definitions - Electronic Signatures in Global and National Commerce Act

The Electronic Signatures in Global and National Commerce Act, commonly known as the E-SIGN Act, is a United States federal law passed in 2000. Its primary purpose is to ensure that electronic signatures and electronic records hold the same legal validity and enforceability as traditional paper signatures and written documents.

Essentially, the E-SIGN Act removes legal barriers to using electronic technology for commerce by stating that a contract or signature cannot be denied legal effect or enforceability solely because it is in electronic form. This applies to transactions that affect interstate or foreign commerce.

Here are some examples illustrating the E-SIGN Act:

• Online Lease Agreement: Imagine you are renting a new apartment. Instead of meeting your landlord in person to sign a physical lease document, you receive an email with a link to an online portal. On this portal, you review the lease terms and then electronically sign the document by typing your name and clicking an "I Agree" button.

  How E-SIGN applies: The E-SIGN Act ensures that your electronic signature on this lease agreement is just as legally binding and enforceable as if you had signed a paper document with a pen. Neither you nor the landlord can later claim the lease is invalid simply because it was signed electronically.

• Digital Loan Application: A small business owner applies for a business loan through their bank's website. After filling out the application, they are presented with the loan agreement and disclosure forms. They review these documents and then click a button that says "Electronically Sign and Submit" to finalize their application.

  How E-SIGN applies: The E-SIGN Act guarantees that this electronically signed loan agreement is legally valid. The bank is obligated to the terms it presented, and the business owner is bound by their commitment to repay the loan, all based on their digital consent and signature.

• Interstate Service Contract: A marketing agency based in Texas secures a new client, a technology startup located in California. They negotiate the terms of their service agreement via email and video calls. To formalize the arrangement, they use a secure online platform where both parties digitally sign the contract for marketing services.

  How E-SIGN applies: Since this transaction involves companies in different states (interstate commerce), the E-SIGN Act ensures that the electronic signatures on their service contract are legally recognized and enforceable. This prevents either party from challenging the contract's validity in court solely because it was signed electronically rather than on paper.