Are Electronic Signatures Legally Binding?

The Legalities of Electronic Signatures Explained…

When considering switching to electronic signatures, most businesses have questions about the legality of this modern technology; they want to ensure that digital signing is secure and of course, legally enforceable.

At eSign, we know the many benefits that an electronic signature can bring to a business, such as improved document turnaround and an enhanced customer experience for clients. But we want every business, in every sector, to have the confidence to make the switch.

That’s why we’ve decided to answer your most pressing questions about eSignatures and their legality. Simply put, yes, they are 100% legally binding. For the ultimate peace of mind that digital signatures and documents are 100% legally binding, keep reading.

What is an e-signature?

An ‘electronic signature’ is a digitalised version of the traditional handwritten signature, which can be used to sign online or digital documents, so there’s no need for printing or scanning. An electronic signature can be as simple as a tick box plus declaration, scanned signature, or digitally drawn signature.

For increased security, verification, and compliance, however, it’s commonly accepted that advanced or qualified electronic signatures should be used. eSign’s platform identifies the signer, creates a time stamp using their IP address and will detect any changes made to the document after signing has been carried out.

What’s the difference between eSignatures and ink signatures?

A wet signature is a traditional way of signing a document by putting pen to paper. It indicates the signer’s intent to agree to the contents of a document or to a set of data to which the signature relates, making them legally binding. Putting pen to paper has been an established way of carrying out business for hundreds of years. Yet in an increasingly digital world, the humble signature was forced to evolve to keep up.

Thus the electronic signature was born! Whether you’re typing out your signatures or digitally drawing them with your mouse cursor, the electronic signature enables you to sign documents online- without having to print them out and sign by hand.

Are electronic signatures legally binding?

eSignatures have been 100% legally binding since 2000 with the introduction of the Electronic Communication Act. They have also been accommodated in European law since 2016 by the eIDAS regulation. Despite this, the uncertainty surrounding the legality of electronic signatures remained. In 2019, the Law Commission stepped in to resolve this remaining ambiguity, confirming the validity and legality of eSignatures in executing documents, including where there is a statutory requirement for a signature.

Are electronic signatures admissible in court?

Yes, electronic signatures are admissible in court. The electronic signature itself demonstrates the intention to agree to the contents of the document. They can also provide additional evidence of ‘intention’ that handwritten signatures cannot supply. With handwritten signatures, the validity is established by comparing copies of the signature with testimonies from handwriting experts or witnesses of the signing. Thanks to the electronic signature’s audit trail which contains information such as the IP address, location, and date/time stamp, determining the authenticity of an electronic signature is actually easier, more time-efficient and cost-effective.

Are there different types of electronic signature?

The eIDAS Regulation defines three levels of electronic signatures:

• Simple electronic signatures – This could be as simple as a tick box plus declaration, a scanned signature or even just writing your name on an email.
• Advanced electronic signatures – An advanced electronic signature requires additional information to identify the signatory, uniquely link the signature to the signatory and detect any subsequent changes to the data. This type of signature provides extra data to help verify the authenticity of the signature and usually involves the use of certificates and cryptographic keys.
• Qualified electronic signatures –an advanced electronic signature that is created by a qualified electronic signature creation device and based on a qualified certificate for electronic signatures. This type of signature is considered to be the most secure, offering data that proves the identity of the signer.

Both advanced and qualified electronic signatures can offer greater authentication, integrity, and non-repudiation, and are therefore more suited to higher value transactions… and are just as legally valid as traditional ‘wet’ signatures.

Are there any restrictions on eSignatures?

Whilst most businesses will accept electronically signed documents, some statutory bodies, such as the HM Revenue & Customs do place restrictions on electronic signatures. Due to social distancing restrictions during COVID-19, more and more Government bodies are now accepting electronic signatures. This is especially true for the HM Land Registry which has recently started to accept digital signatures on transfers of ownership of property, leases, mortgages and other property dealings.

The HM Revenue and Customs also now accepts electronic signatures on the following:

• P87 claims for employment expenses;
• marriage allowance claims; and
• 64-8s to authorise an agent.

There can also be complications around witnessing electronic signatures which make them unsuitable in certain circumstances. If in doubt, it’s best to ask the recipient whether they will accept an electronically signed document.

eSignature legality around the world

Across the world, every country has different legislation surrounding electronic signatures. If you’re conducting business internationally, it’s always advisable to check the rules and regulations of that region or country.

European Union

Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions, commonly known as eIDAS, took direct effect in EU member states from 1 July 2016. It established an EU-wide legal framework for electronic signatures. eSign’s digital signature solution is compliant with eIDAS and EU electronic signature technical standards. Esign is also compliant with GDPR.

United States of America

eSign’s digital signature solution complies with the definition of an eSignature under the Electronic Signatures in Global and National Commerce (ESIGN) Act, the Uniform Electronic Transactions Act (UETA) and the Digital Signature and Electronic Authentication Law.

For a full list of the eSignature Laws around the world view our recent blog on eSigning Internationally.

ESIGN Act (2000) addresses eSignatures and e-records, allowing for electronic signatures in all 50 states when federal law applies. It defines an eSignature as an electronic sound, symbol, process attached to or logically associated with a document and executed or adopted by an individual with the intent to sign and be legally bound. eSign also complies with the Uniform Electronic Transactions Act (UETA, 1999)

Are you looking for an electronic signature?

If you’re looking to implement an electronic signature across your business, why not consider eSign as your dedicated provider? Try our 14-day free trial today and discover the time- and money-saving power of eSign for yourself.

Why Choose eSign?

Improve Efficiency

Switching between digital and paper documents is unnecessary and time-consuming, adding extra steps into your workflow such as printing, scanning, and posting. By adopting an electronic signature, you can easily create, sign, and send out digital documents in just a few clicks, allowing you to improve operational efficiency and save time on managing documents and eSignature collection.

Save Money on Paper

The cost of collecting signatures and processing paper documents can all add up, especially if you rely on documents and signatures to get business done. By using digital documents and electronic signatures, you can eliminate spending on paper, envelopes, stationery, and postage, as well as the money spent on printer ink, toner, and the maintenance costs of this equipment.

Embrace Hybrid and Home Working

Not all your employees will have a printer or scanner at home; using traditional signatures may therefore not be viable if your employees need to work away from the office. If your business is looking to offer hybrid or home working options, adopting a digital signature provides the software your employees need to sign and generate digital documents at home, allowing them to continue working effectively from any location.

Boost Document Security

Using a traditional signature can mean that you’re sending out sensitive contracts or documents in the post or arranging time-consuming in-person meetings to collect your client’s signature. Using an advanced or qualified eSignature ensures you can collect signatures whilst managing the risk of fraud. Most providers will also offer expert cybersecurity, as well as extra protective measures, to ensure your documents don’t fall into the wrong hands.

Enhance Customer Experience

Using electronic signatures and digital documents not only brings benefits to your business but also to your clients. Paper-based processes can be time-consuming for your signers; if it’s not an editable document they’ll have to print, sign and either scan or post the document. Keeping everything digital ultimately makes life easier for your clients, enabling them to view, eSign and return your documents in just a few clicks.

eSign is a leading provider of digital transaction management solutions, supplying professional services including Electronic Signatures, Web Forms, ID Checker, Verification Tools, Personalised Emails, API and Payment Processing to businesses of all sizes across the UK.

To find out more about our eSign solutions and how they could transform your business, get in touch with us today.