Today marks the 16th anniversary of National ESIGN Day. Recognized and celebrated on June 30 of each year, it commemorates the ESIGN Act (Electronic Signatures in Global and National Commerce Act), fittingly eSigned by former President Bill Clinton in 2000. It also served as the spark for the continuing digital transformation for business across the U.S.
The ESIGN Act established that electronic signatures have the same legal standing as traditional wet-ink signed documents. As a result, a contract or record of transactions cannot be ruled unenforceable simply because it is in electronic form. While the Act was passed by the U.S. Congress in 2000, the day to celebrate ESIGN was created in 2010 when both Houses of Congress passed a resolution at the request of industry leaders to recognize the monumental day. Looking back, it’s hard to imagine a world without eSignature technology to support our increasingly digital global economy.
In the late 1980s, the Uniform Law Commission (ULC) put together a consortium of individuals, including eOriginal’s President and CEO, Stephen Bisbee; Amelia Boss, Trustee Professor of Law at Drexel University; Patricia Fry, lifetime commissioner and member of the Uniform Law Conference; Jeffrey Ritter, external lecturer for the University of Oxford and digital information expert; and David Whitaker, counsel for BuckleySandler LLP, to develop the Uniform Electronic Transaction Act (UETA) in 1999 and bring coherence and consistency to the validity of electronic signatures.
Fast forward to November of 2014, the Electronic Signature and Records Association (ESRA), which is the premier trade organization representing electronic signature adopters and providers, presented the ULC team with its inaugural Cornerstone Award.
Why National ESIGN Day is Important
As we noted last year, the legal parameters for ESIGN created the foundation for the digital transformation of financial services and the entire business community:
Today, the ESIGN Act enables businesses to operate and execute loans and contracts in a fully end-to-end digital environment. The ESIGN Act, along with the Uniform Electronic Transaction Act (UETA), empower electronic documents and electronic signatures to be used with the same effect as paper documents and ink signatures.
Additionally, the Uniform Commercial Code (UCC) Article 9, together with UETA and ESIGN, set standards for electronic documents to be pooled, sold, securitized and collateralized. These stringent requirements for the handling of electronic documents as part of online contracts which can be transferred or sold have resulted in infrastructure conflict, risk management issues and process complexity for many organizations.
While eSignature is just the first step in a digital transformation of financial services, its importance cannot be overstated. Earlier this week, guest author Margo Tank of BuckleySandler wrote a blog titled, Verdict Sets Important Precedent for Paperless Mortgage, which supports the importance of ESIGN Day and the legislation behind it.
As outlined in the post, “Two separate court decisions have recently set the precedent that electronically signed promissory notes secured by real property (eNotes) are legally enforceable by lenders. These decisions address many concerns held by investors about buying eNotes and suggests further clarity may have to come from case law as the digital mortgage industry matures.”
It’s been amazing to watch the progression of the Digital Transaction Management industry. One thing is certain, whether it’s an auto loan, mortgage, equipment leasing contract or student loan, the eSignature is now an integral and relevant part of the financial services industry.