Electronic Signatures in Global National Commerce Act


The Electronic Signatures in Global National Commerce Act (ESIGN) is a U.S federal law enacted in 2000. It recognizes the legal validity of electronic signatures and records in commercial transactions and contracts. It allows the use of electronic records to satisfy any statute, regulation, or rule of law requiring that such information be provided in writing, if certain requirements are met.


The phonetic pronunciation of the phrase “Electronic Signatures in Global National Commerce Act” would be:- Electronic: /iˌlekˈtrɒnɪk/- Signatures: /ˈsɪgnətʃərz/- in: /ɪn/- Global: /ˈgloʊbəl/- National: /ˈnæʃənəl/- Commerce: /ˈkɑːmərs/- Act: /ækt/

Key Takeaways

  1. The first main takeaway of the Electronic Signatures in Global and National Commerce Act is that it gives electronic signatures the same legal status as handwritten ones. This establishes the validity and enforceability of contracts and documents signed electronically, thus promoting the use of electronic records and signatures in commerce.
  2. Secondly, the act specifies the standards for electronic records required by law. It ensures that the electronic records kept are accurate, accessible, and reproducible for subsequent reference. It also protects consumer rights by requiring businesses to give consumers the option to receive paper records if they prefer.
  3. Lastly, the law reinforces the fact that no contract, signature, or record shall be denied legal effect solely because it is in electronic form. Despite this, it also recognizes that electronic signatures are not suitable for certain types of documents like wills, family law documents, court orders and other materials specified by law.


The Electronic Signatures in Global National Commerce Act (ESIGN) is critically important as it legitimizes electronic signatures and records in terms of their legality and enforceability, providing a digital equivalent to traditional paper-based transactions and handwritten signatures. Instituted in the U.S. in 2000, ESIGN gives individuals, businesses, and organizations the ability to use electronic means for signing and record-keeping purposes, thereby streamlining processes, reducing costs, and increasing efficiency. Its significance lies in facilitating digital commerce, supporting modern business methods, and aligning with evolving technology trends, while still ensuring the security and integrity of electronically signed documents. The Act remains a pivotal technology term as economies shift to digital platforms and electronic transactions continue to grow in prominence.


The Electronic Signatures in Global National Commerce Act (ESIGN Act), enacted by the United States Congress in 2000, serves a key purpose of providing a legal framework for the use of electronic signatures and electronic records in commerce. The primary objective of the Act is to promote and facilitate the use of electronic records and online transactions in interstate and foreign commerce. By providing legality to electronic signatures, it not only makes online transactions more seamless and convenient but also facilitates the carrying out of numerous other online activities necessitating authentication.Digitalization, technological advancements, and increasing internet access are propelling a shift towards doing business online. In this context, the ESIGN Act demonstrates its importance by underpinning the integrity and legality of such transactions. Before the Act, businesses found it challenging to finalize contracts online, as there were uncertainties about the validity of electronic signatures. Now, the Act ensures that a contract or signature cannot be denied legal effect just because it is in electronic form. Therefore, one can safely say that it plays a crucial role in facilitating e-commerce transactions, digital trade simulation, electronic filing of documents, and other essential operations of businesses and governmental organizations.


1. Online Banking: The Electronic Signatures in Global and National Commerce Act (ESIGN) has enabled banks to offer their services digitally. This includes everything from opening a new account to transferring funds to a different account. Customers use their electronic signature to authorize these actions, providing a level of security and confidentiality. Thus, ESIGN plays an essential role in making online banking seamless.2. E-commerce Transactions: E-commerce platforms like Amazon and eBay adopt the ESIGN Act when a user agrees to their terms and conditions by clicking an “I Agree” button. The purchaser’s agreement is identified as an electronic signature that complies with the ESIGN Act. 3. Legal Contracts and Documents: Law firms and land-related contracts often use electronic signatures to expedite processes. For instance, during a property sale online, where the seller resides in a different state, documents can be signed electronically (like DocuSign), following the ESIGN Act. This improves the process efficiency, eliminates geographical barriers, and reduces paper waste.

Frequently Asked Questions(FAQ)

Q: What is the Electronic Signatures in Global National Commerce Act?A: The Electronic Signatures in Global National Commerce Act (ESIGN) is a U.S. federal law passed in 2000. It maintains that electronic signatures and records are just as legal and enforceable as traditional paper documents and handwritten signatures.Q: Who does the Electronic Signatures in Global and National Commerce Act apply to?A: ESIGN applies to businesses, merchants, and customers who use electronic records and signatures in interstate and foreign commerce.Q: How does Electronic Signatures in Global National Commerce Act (ESIGN) affect businesses?A: ESIGN allows businesses to utilize electronic formats for official paperwork, increasing the efficiency of many business operations. It removes the requirement for companies to keep paper copies of many forms and documents, saving time, space, and resources. Q: Are electronic contracts and signatures legally binding under the ESIGN Act?A: Yes, the ESIGN Act gives electronic signatures a legally binding status. E-contracts signed using legitimate digital signatures are just as valid as those carried out via traditional methods. Q: Does ESIGN cover all transactions?A: While ESIGN covers a broad range of commercial activities, there are exceptions. For example, it does not apply to wills, trusts, court documents, and certain areas of property law.Q: How does ESIGN impact consumer rights?A: Customers retain their rights under ESIGN. They must first give their explicit consent to receive information electronically, and they must be told of any hardware or software required to access and keep these electronic records.Q: How does a business obtain a customer’s consent to do business electronically under ESIGN?A: Before obtaining consent, the business must provide consumers with a clear and conspicuous statement about their rights. The consent during the transaction must be documentable, and the business must provide an option to withdraw consent.Q: How does ESIGN define an electronic signature?A: Under ESIGN, an electronic signature is an electronic process, sound, symbol, or action, attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.

Related Finance Terms

  • ESIGN Act
  • Digital Signature
  • Authentication
  • E-Commerce
  • Transaction Security

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