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UETA Act: here’s what you need to know

UETA Act: here’s what you need to know

The Uniform Electronic Transactions Act (UETA) was adopted in 1999, and it provides a framework for determining the legality of electronic signatures. It guarantees that electronic signatures are given the same legal weight as handwritten signatures. 

The UETA is applicable in both business and e-commerce transactions, and it provides some legal recourse if things go wrong in an electronic transaction. However, it doesn’t apply to wills or testamentary trusts.  

Uniform Electronic Transactions Act (UETA)

Now that you understand what the UETA is, you may be wondering how to ensure that your documents are UETA-compliant. The UETA actually outlines four major requirements that all electronic documents must meet to be considered valid under U.S. law:

  • Intent to sign: Electronic signatures are only valid is both parties intended to sign, just like with handwritten signatures.
  • Consent to do business electronically: All parties must acknowledge their consent to conduct business electronically. This is easier to prove when it comes to business transactions, but it can be a bit trickier if you collect signatures from consumers. 

You can ensure the consumer agreed to an electronic transaction by meeting the following legal requirements:

  • The customer a copy of the UETA Consumer Consent Disclosure
  • The customer agreed to use an electronic document to conduct the transaction
  • The customer did not withdraw their consent to conduct business electronically
  • Association of signature with the record: Whatever system used to capture the eSignatures must create some sort of electronic record of the transaction. This electronic form shows the process of how the document was signed and proved the other person used an electronic signature. 
  • Record retention: It’s not enough to just create a written record of the transaction; both parties must have access to it. So every written record must be maintained and made available to all parties that signed the document. 

UETA vs. ESIGN Act

You may notice that both the UETA and the ESIGN Act are frequently mentioned anytime you read about the legality of electronic signatures. The UETA is often confused with the ESIGN Act since both exist to solve a similar problem. 

Both are U.S. regulatory acts that provide guidelines for how to conduct business electronically. These two acts work together to ensure that eSignatures receive the same legal recognition as electronic signatures. 

However, there are differences between the two.  The ESIGN Act is a federal law, which means that every state must comply. 

Whereas the UETA is adopted on a state-by-state basis. Each state gets to decide whether they want to accept or reject the guidelines laid out in the UETA. We’ll look at this more closely in the following section.

UETA adoption by State

The UETA is enacted on a state-by-state basis, so every state in the U.S. chooses whether or not to adopt this legislation. Currently, the UETA has been enacted by 47 states in the United States, as well as the District of Columbia, the U.S. Virgin Islands, and Puerto Rico. 

The following three states have decided not to adopt the UETA. These states did pass similar laws to enforce electronic signatures legally. 

  • Illinois: Instead of adopting the UETA, Illinois chose to enact the Electronic Commerce Security Act.
  • New York: New York implemented the Electronic Signatures and Records Act. This act states that electronic signatures should be given the same legal weight as handwritten signatures. 
  • Washington: Washington State hasn’t adopted the UETA, but it has implemented similar legislation. The  Electronic Authentication Act was implemented in 1997. 

Is PandaDoc software UETA compliant? 

Yes, PandaDoc software is legally binding and complies with the UETA and ESIGN Act. You’ll receive an electronic certificate with every signed document so that you can keep an electronic record of all digital transactions.   

Plus, you can add passwords to every PDF. Password-protected documents make it possible for you to create a secure digital signature every time.

How to get started with eSignatures

If you regularly create business documents and collect eSignatures, you need to find the right electronic signature software. The right software will allow you to know that every eSignature you receive is a legal digital signature

PandaDoc is one of the few companies that provide electronic signatures entirely for free. When you sign up for our Free eSign Plan, you receive unlimited legally-binding electronic signatures. 

Plus, you can upload and send as many documents as you want. This means you can save money without having to sacrifice security or quality in the process. You can learn more about our Free eSign Plan here.

Legal vocabulary

Here is a brief overview of some of the legal vocabulary you’ll encounter in regards to electronic signatures.

NotarizationNotarization is the process of ensuring a document is authentic and trustworthy. An impartial Notary Public enforces the notarization process. The Notary verifies that the signature is legitimate, was signed without force or intimidation, and is credible.

Traditionally, the notarization process was performed in-person and required a handwritten signature. However, electronic signatures have permanently changed the way we conduct business, and it is now possible to get a document eNotarized.  
ObligorAn obligor is a person who is legally bound to another person by a contract or legal obligation. This term is often used in a financial setting to refer to someone who owes money to another person.  
NCCUSLThe National Conference of Commissioners on Uniform State Laws (NCCUSL) is a non-profit association with appointed commissioners for each state in the U.S. This organization exists to discuss any areas where state laws could benefit from more uniformity.

The NCCUSL will then draft Uniform Acts and propose them to various jurisdictions. It was the NCCUSL that adopted the UETA in 1999.
Testamentary trustsA testamentary trust is a trust established according to the provisions laid out in an individual’s last will and testament. A trustee is then appointed to manage and distribute the assets to the beneficiaries described in the will. A single will can have multiple testamentary trusts, and each one is irrevocable.
Alex Lamachenka

Alex Lamachenka Sr DemandGen Manager at PandaDoc

Alex is the Sr. Demand Generation Manager at PandaDoc who handles content and crowd marketing. His background covers sales, project management, and design. In his free time, you can find him traveling, hiking or tasting local foods.

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