E-SIGN Act, legal effect of electronic signatures and records, retention, notarization and state law

Section 7001(a)(1) provides that a signature, contract, or other record relating to a transaction in or affecting interstate or foreign commerce may not be denied legal effect, validity, or enforceability solely because it is in electronic form.

Section 7001(a)(2) provides that a contract relating to a transaction in or affecting interstate or foreign commerce may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation. Section 7001(a) applies with respect to any transaction in or affecting interstate or foreign commerce, notwithstanding any statute, regulation, or other rule of law other than subchapters I and II of chapter 96 of title 15.

Section 7001(b)(2) provides that subchapter I does not require any person to agree to use or accept electronic records or electronic signatures, other than a governmental agency with respect to a record other than a contract to which it is a party.

Section 7001(d)(1) provides that where a law requires a contract or other record relating to a transaction in or affecting interstate or foreign commerce to be retained, that requirement is met by retaining an electronic record of the information in the contract or other record.

Under section 7001(d)(1)(A) and (B), an electronic record retained to meet a legal retention requirement must accurately reflect the information set forth in the contract or other record and remain accessible, for the period the law requires, to all persons entitled to access it, in a form capable of being accurately reproduced for later reference.

Section 7001(d)(3) provides that a law requiring a contract or other record to be provided, available, or retained in its original form, or providing consequences if it is not, is satisfied by an electronic record that complies with paragraph (1). Section 7001(d)(4) provides that a law requiring the retention of a check is satisfied by retention of an electronic record of the information on the front and back of the check in accordance with paragraph (1).

Under section 7001(e), where a law requires a contract or other record relating to a transaction in or affecting interstate or foreign commerce to be in writing, the legal effect, validity, or enforceability of an electronic record of it may be denied if the electronic record is not in a form capable of being retained and accurately reproduced for later reference by all parties or persons entitled to retain the contract or other record.

Under section 7001(g), a requirement that a signature or record relating to a transaction in or affecting interstate or foreign commerce be notarized, acknowledged, verified, or made under oath is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required by other applicable law, is attached to or logically associated with the signature or record.

An electronic signature is 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 (section 7006(5)). The term person in the subchapter includes an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, governmental agency, public corporation, or any other legal or commercial entity (section 7006(8)).

Section 7002(a) provides that a State statute, regulation, or other rule of law may modify, limit, or supersede section 7001 with respect to State law only if it meets one of the two conditions that section states. Section 7002(a)(1) provides that a State rule of law may modify, limit, or supersede section 7001 where it constitutes an enactment or adoption of the Uniform Electronic Transactions Act as approved in 1999 by the National Conference of Commissioners on Uniform State Laws.

Section 7002(a)(2)(A) provides that a State rule of law may do so where it specifies the alternative procedures or requirements for the use or acceptance of electronic records or electronic signatures to establish the legal effect, validity, or enforceability of contracts or other records, on conditions that section states. Under section 7002(a)(2)(B), an alternative-procedures rule of State law enacted or adopted after June 30, 2000 must make specific reference to chapter 96.

Section 7003(a) lists contracts and records that section 7001 does not reach to the extent a law on wills, codicils, or testamentary trusts, a State law on adoption, divorce, or other family law, or the Uniform Commercial Code other than sections 1-107 and 1-206 and Articles 2 and 2A governs them. Section 7003(b)(1) provides that section 7001 does not apply to court orders or notices, or official court documents required to be executed in connection with court proceedings.

Section 7003(b)(2) provides that section 7001 does not apply to a notice of the cancellation or termination of utility services, of default, acceleration, repossession, foreclosure, or eviction, or the right to cure, under a credit agreement secured by, or a rental agreement for, a primary residence of an individual, of the cancellation or termination of health insurance or benefits or life insurance benefits, or of a product recall or material failure that risks endangering health or safety.

Section 7003(b)(3) provides that section 7001 does not apply to any document required to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials. Section 101 of title I of Public Law 106-229, dated June 30, 2000, is the source of section 7001. Section 107(a) of Public Law 106-229 provides that the title enacting the subchapter is effective on October 1, 2000.

Subject to subparagraph (B) of the same section, section 107(b)(1)(A) of Public Law 106-229 provides that the title enacting the subchapter is effective on March 1, 2001 with respect to a requirement that a record be retained imposed by a Federal statute, regulation, or other rule of law, or by a State rule of law administered or promulgated by a State regulatory agency.