Are Electronically Signed NDAs Legally Binding?

The laws that make e-signatures valid

Two laws do most of the work. The federal Electronic Signatures in Global and National Commerce Act, known as the ESIGN Act, was passed in 2000. It says a signature, contract or record relating to a transaction in interstate or foreign commerce can’t be denied legal effect, validity or enforceability solely because it’s in electronic form.

At the state level, the Uniform Electronic Transactions Act (UETA) says much the same thing, and nearly every state has adopted it. New York hasn’t; it has its own law, the Electronic Signatures and Records Act, which also gives electronic signatures the same effect as handwritten ones.

None of these laws requires a particular technology. An electronic signature can be a typed name, a drawn signature, a click on a clearly labeled button, or another electronic sound, symbol or process, as long as the person adopts it with the intent to sign.

What makes an e-signature hold up

The laws make e-signatures valid in principle. Whether a particular signature holds up in a dispute comes down to evidence. Four things matter most:

• Intent to sign. The signer took a deliberate action meant as a signature, like typing their name into a signature box and clicking a button that clearly says they’re signing.
• Consent to do business electronically. The parties agreed to sign electronically. UETA applies only when the parties have agreed to conduct the transaction electronically, which can be inferred from the circumstances. An explicit checkbox removes the doubt.
• Association with the record. The signature is attached to, or logically linked with, the specific document signed, and you can show the document wasn’t changed afterward.
• Record retention. Each party can keep an accurate copy of the signed agreement and reproduce it later. An electronic contract that a party couldn’t save or print may be harder to enforce against them.

Showing who signed

Courts also ask whether the signature was really the act of the person it belongs to. Under UETA, that can be shown in any manner, including through the security steps used in the signing process. In practice, the evidence is usually how the signer was reached, such as a private link sent to their email address, and the technical record of what happened when they signed.

What FastNDA records for each signature

FastNDA’s signing process captures that evidence:

• An explicit checkbox where each signer consents to sign electronically.
• A typed signature from each party.
• The time, IP address and browser of each signature.
• When the other party first viewed the agreement.
• Delivery of a private signing link to the other party’s email address.
• A SHA-256 fingerprint of the agreement text, recorded when the first party signs and checked when the second signs, so both sign the same words.
• A certificate of completion appended to the signed PDF, and the PDF emailed to both parties.

Documents e-signature laws exclude

E-signature laws don’t cover everything. The ESIGN Act lists documents it doesn’t apply to, and UETA and the states that adopted it have their own, shorter lists. Common exclusions include:

• Wills, codicils and testamentary trusts.
• Family law documents, such as those for adoption or divorce.
• Court orders and official court documents.
• Certain notices, such as utility shutoffs, foreclosure or eviction from a primary residence, cancellation of health or life insurance, and product recalls.
• Documents required to accompany the transport of hazardous materials.
• Some transactions under the Uniform Commercial Code.

Where NDAs fit

An ordinary business NDA isn’t on any of those lists. It’s exactly the kind of commercial contract the laws were written for. If your NDA is part of a larger transaction with its own formal requirements, or the other party is outside the US, where different rules may apply, check with a lawyer.

People often ask the related question of whether an NDA also needs a notary or witness. Usually it doesn’t; see do NDAs need to be notarized. When you’re ready, drafting and previewing an NDA is free, and you pay only when you send it.