Traditional ‘wet’ signatures—from pen signs to seals and stamps—were once the standard method of signing legal documents. Today, these signatures are outdated because of technological advancements. Electronic signatures, or e-signatures, are now quickly becoming the preferred method of signing documents, especially in the business world.
That said, some people may still wonder if e-signatures are actually legally binding and recognized. This article takes an in-depth look at the legality and validity of e-signatures, including critical elements that make them legit.
Understanding E-Signatures
An e-signature is a digital version of a traditional wet or handwritten signature. It’s an efficient way to get electronic documents signed quickly.
In general, e-signatures software like jSign follows the Public Key Infrastructure protocol. This protocol uses a mathematical formula to generate ‘keys’ for verifying the communication’s integrity. You have one private key and one public key.
An e-signature is created using a private key when signing a digital document. The algorithm generally makes and encrypts data or hash that matches the signed copy. The encrypted data comprise your e-signature and the document timestamp.
When you send the signed digital document, it includes the public key to decrypt the e-signature. If the document is altered after signing, the generated hash is also changed, making the public key useless. The document can’t be decrypted, and your e-signature will be invalidated.
Are They Legally Binding?
The short answer is yes, they are. Several laws have made e-signatures lawfully binding and recognized as their handwritten counterparts.
In the US, a federal law passed in 2000 grants the legal acceptance and recognition of e-signatures. According to this law, the legality of e-signatures matches that of a traditional, handwritten signature. As such, they are accepted in all states where this federal legislation applies.
Another law was adopted for states where the aforementioned federal law doesn’t apply. Developed by the Uniform Law Commission, the Uniform Electronic Transaction Act, or UETA, serves as a legal guide for e-signature enforceability. In addition, some states, including Illinois, have their own regulations and legislations ensuring that e-signatures have the exact legality and validity as wet signatures.
Outside of the US, numerous countries, including Australia, Canada, and the UK, also have existing laws ensuring that e-signatures are legally binding and valid in a court of law. Therefore, e-signatures ensure efficient and easy legal documents wherever you conduct your business.
E-Signature Validity Criteria
E-signatures are generally considered legally binding. That said, several elements and criteria need to be met to ensure that e-signatures are lawfully accepted. When you satisfy these conditions, your e-signatures should be as legally binding as traditional inked signatures and reduce legal risks.
Here are the following criteria to ensure e-signature validity:
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Intent To Sign
With the traditional wet signature, a person must purposely and deliberately sign the document to be valid and legal. The same is true for e-signatures. Thus, you need to demonstrate that the person intends to sign.
In digital documents, this is done by requiring an individual to type their name. Or you can also provide a clear option like an ‘Accept’ button to show intention.
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Consent
Aside from making it clear that the e-signature was intentionally provided, you must provide proof that the person consented to the transaction online.
For instance, you can include a consent clause in your online form and require the person to tick or click the ‘I Agree’ box before they can sign and submit their e-signature.
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Association And Attribute
You must make a direct connection or clear association between the e-signature and the signed digital document. In addition, you need to provide an explicit attribute of the e-signature, which may include an IP address, a timestamp, or an email trail.
Fortunately, most e-signature tool providers already provide these attributes. Some may even have a two-step verification system for signers. This system strengthens your company’s security for higher attribution standards.
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Opt-Out Clause
An opt-clause may be included. It allows a person to request a physical copy to sign instead. Clear instructions on how traditional signatures work must be included.
Takeaway
There’s no denying that e-signatures have become the norm in the modern business world. Thanks to its numerous benefits, from increased security and convenience, e-signatures can help streamline business transactions like nothing before.
And you don’t have to worry about its validity. As long as your business and the software used adhere to all relevant laws and primary elements, you can be certain that your e-signatures and digital documents have legal powers.