Do you have a question? 020 8804 1022

Electronic Signatures – Are they legally binding?

Electronic Signatures on Phone

So, you’ve got a document you need signed by two separate parties. These parties could be opposite sides of the country or even the world!

What do you do?

Do you send it in the post to one party, wait for them to sign it and return it to you to send on to the other, where you then have to wait for them to sign and return it again, hoping that it doesn’t get lost somewhere along the way? Frankly, that sounds like a ridiculous, antiquated way of doing business.

Do you send the document by email to one party, to print, sign, scan and send it back, then repeat the process with the second party? Better, but still, imagine all that wasted paper printing documents that will end up in the bin. What if the party doesn’t have a printer or scanner? Again, not an ideal situation.

The perfect way would be to send an electronic copy of the document to all relevant parties. They can then either draw their signature with their mouse or finger on a smartphone, or even just type it in. All parties instantly receive a copy of the signed document and everyone’s happy, having completed a process that could have taken days, in just a few seconds.

But is this legally binding? Let’s find out.

What is an electronic signature?[1]

First, let’s discuss what an electronic signature is, because there are actually three types.

  1. Simple electronic signatures are those that are typed or scanned in. In other words, there’s nothing to link the party to the signature.
  2. Advanced electronic signatures are uniquely linked to the signatory and are capable of identifying that signatory.
  3. Qualified electronic signatures are an advanced form of electronic signature, created by a qualified electronic signature creation device and based on a qualified certificate for electronic signatures.

Make sense? Thought not. Well think of it like this. Each one has an increasing level of security and validity.

So, a simple electronic signature offers the least security as there is little to prove that it was you who signed the document other than the appearance of your signature.

Now an advanced electronic signature is more secure. It has a solid link to the signatory to show that it was them that signed it. It offers unique identification and authentication of the signee. This is achieved usually by issuing a certificate to them. This isn’t a physical certificate, that would unnecessarily complicate the process. Instead, you will receive a digital certificate, which will be stored on your device to prove that it is you who is signing at the time.

A qualified electronic signature is the most secure and holds the same value as a written signature.[2] However, the technological burden that they impose on a company to carry out means that they are little used and only really required in high risk cases.

Yes, but are electronic signatures legally binding?

So now you’re thinking, ‘great, thanks Ryan, we know what an e-signature is, but you’ve still not answered the question of whether they are legally binding’.

Well, let me give you the simple answer. Yes!

Countries around the globe have worked to introduce electronic signatures. In fact, the EU, the US, Australia and New Zealand, China, Japan and India are just a few amongst those to have introduced laws to assure the validity of electronic signatures.

In 2016, the EU introduced Regulation no 910/2014, otherwise known as the Electronic Identification and Electronic Trust Services (eIDAS) Regulation. This is a pillar of the EC Digital Single Market Strategy and applies to all EU member states. The regulation ensures confidence in electronic signatures across the EU.

Article 25 states: “1.   An electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures.”[3]

So there you have it, a simple electronic signature should in most cases be satisfactory and will be held as evidence should a case be brought before court.

Best Practices

There are a number of steps you should take to ensure the validity of your electronic signatures.

Firstly, use a reliable electronic signature service. DPS integrates with Adobe Sign, which allows for both simple and advanced electronic signatures. You get to choose which one you require based on the risk involved in the transaction.

The recipient can then simply sign the document either on their desktop, phone or tablet, quickly and easily. Adobe Sign records all of the information regarding the recipient’s device and location to provide greater evidence as to the identity of the signer and provides a full audit trail.[4]

Secondly, you can implement measures in your contract templates. You should add clauses, especially if dealing with parties outside of the EU. These clauses should expressly state that the contract shall be governed under the law and jurisdiction of England and Wales, to ensure that the electronic signature can be used as evidence.

Finally, add a clause giving express consent to do business electronically. You should also include an opt-out, so the signatory can decide whether or not to do business in this way.

Conclusion

So, there you have it. Electronic signatures are without doubt a legal, valid method of completing contracts.

They provide you with a much quicker and client friendly way of doing business. Using electronic signatures, you will complete processes much quicker and will become much more productive.

With DPS you can electronically sign a document and email it to your client who can then sign it on the phone or tablet using Adobe Sign, with just a few taps and you both instantly get a signed copy and audit trail.

We will be demonstrating this whole process in our webinar, ‘How you can have documents delivered, signed and returned in seconds’. For more details and to register, click here.

Further Reading

Adobe Global Guide to Electronic Signature Law

Adobe Webinar: Global Electronic Signature Law

Department for Business, Energy & Industrial Strategy Electronic Signatures and Trust Services Guide 2016

[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/545098/beis-16-15-electronic-signatures-guidance.pdf

[2] eIDAS Article 25 (2) – https://www.eid.as/home/#article25

[3] eIDAS Article 25 (1) https://www.eid.as/home/#article25

[4] https://acrobat.adobe.com/uk/en/sign/capabilities/electronic-signature-legality.html

Added By: Ryan Sparrow | Date Added: 5th Sep 2018 | Posted In: Miscellaneous

One comment on “Electronic Signatures – Are they legally binding?”

Write a Reply or Comment

Your email address will not be published. Required fields are marked *

We use cookies to provide you with a better website. To find out more, please read our cookie policy.