Digital Signature Legality and Interest in the World
Table of Contents
- What are digital signatures?
- The legality of digital signatures
- Are digital signatures better than ‘wet’ signatures?
- Conclusion
Digital signatures are essential in ensuring businesses conduct their operations efficiently, but are they legal?
Before the computer age, people executed contracts and agreements with pen and paper. It was, therefore, easy to authenticate agreements by penning down a signature, usually at the end of documents.
However, computers have brought considerable changes to how contracts are created now. Organizations are going from digitizing sections of their business to operating entirely online. The unavoidable need to engage with international customers has compelled many companies to embrace this change.
There is also the concern about global warming, trees, etc. But none of these reasons hit organizations like the COVID-19 pandemic forced many to go digital, and we saw the rise of remote work. And although the demand for remote work abates, that for digital signatures remains.
With the rise of digital signatures comes more questions about its legality. The short answer is that in most cases, digital signatures are legally accepted and have the same ruling as a handwritten signature. There are instances where you may need a long answer, though, and it’s all laid out below.
The legality of digital signatures
Many national and international laws confirm the legality of digital signatures. For example, the United States passed the Electronic Signatures in Global and National Commerce Act (E-SIGN) into law in 2000. Alongside the Uniform Electronic Transactions Act (UETA), it signaled the beginning of acceptance for digital signatures worldwide.
Today, many other nations have followed suit to establish specific laws that enforce legality. Others have added it to existing laws. For instance, Canadian law states that letters, characters, and numbers can be used with digital signatures.
The United Kingdom also granted legal status to digital signatures in 2000 through the Electronic Communications Act. However, they adopted the European Union’s Electronic Identification and Trust Services for Electronic Transactions (EU Exit) in 2016.
As for the European Union, most of the countries under them have also recognized digital signatures as a legal and enforceable means of authentication.
It is common to find digital signature laws or sections under laws attesting to its legality. In fact, in countries where there are legality issues with digital signatures, it is usually a case of certain conditions or requirements.
Therefore, it is essential to consult relevant laws when reaching agreements, especially with parties in other countries.
Countries That Accept Digital Signatures
In any case, digital signatures are usually valid as far as other elements that make up a contract are present. For example, there must be an offer, consideration, acceptance, capacity, consent, intent, etc.
The eSign, for instance, requires that all parties consent to digital signature use. There must be no force or threat to sign digitally. The signer should be given the option to use a traditional handwritten signature. Other provisions include verification.
If all criteria have been met, the legality of digital signatures stands, and businesses can go on. There are, however, certain instances where it may be impossible to use digital signatures. Those are exceptional cases, such as in the event of death, birth, adoption, or divorce.
What is a digital signature, and what are they good for?
Signatures are modern handshakes. They signify a mutual agreement and make contracts legally valid by verifying the authenticity of documents and making all parties identifiable. In a modern legal system, they are also used to prevent fraud and protect personal security.
However, collecting signatures and getting all parties to sign a contract can be a time-consuming and difficult task if done manually and without a proper contract management system. That is one of the main reasons most modern companies are using digital signatures to close their deals.
If you are not already using a digital signature, you are most likely stuck in a bad habit of using printers, scanners and back-and-forth emailing in order to get some ink on a paper. That process is slow, manual, and a waste of paper – even for the simplest of documents. For more complicated documents, this way of working can become extremely troublesome since you will have requested changes, different versions of the same document, and multiple signees who must sign in a specific order.
This process makes you prone to errors without a digital signature. You will also be working unnecessarily slow, and you can easily lose track of everything. Furthermore, long waiting times spent on new revisions, re-opened negotiations, and multiple documents add confusion which creates doubt and weakens the all-important trust in the process. In that way, a small practical issue ends up as one of the biggest obstacles towards a done deal. To avoid such problems, industry leaders are using digital signatures. They are a great way to save time on your contractual work, shorten the time-to-signature, increase the close-rate, and spare the environment since you do not have to print documents.
Are digital signatures better than ‘wet’ signatures?
The benefits of digital signatures are numerous, some implicit and others explicit. Direct benefits of digital signatures include convenience, ease, speed, cost-effectiveness, and mobile-friendliness.
You can use digital signatures with other technologies and apps. That’s why you can quickly sign a Word document digitally in seconds.
Digital signatures will reduce the timeline for approving agreements to hours and sometimes minutes. It also makes it possible to conduct businesses across the globe while giving concerned parties a centralized view of the edit and audit trail.
It only takes a notification; each party can sign the document from anywhere. You don't need to print, scan, or move papers between offices. As a result, the HR departments can hire faster, and the sales team can increase efficiency when they adopt digital signatures.
Digital signatures are also more secure due to the technology employed in their authentication. Instead of handwritten signatures that can be forged, it uses fast algorithms to prevent alterations.
Furthermore, since digital signatures are done electronically, it also reduces the need for papers, which is a considerable advantage to the environment.
Conclusion
Digital signatures have the same rulings as handwritten signatures as far as legality is concerned. Numerous national and international laws have supported the use with occasional differences in requirements.
Not only are digital signatures enforceable in many countries, but they are also very convenient to use and have several benefits.
If you adopt a contract management tool like Contractbook, you will have access to the best digital signature functions, among other advantages.
FAQs
Yes. The first electronic signature directive was published by the European Commission at the end of 1999. But because it was directive and not a regulation — many European countries interpreted the law in their own ways, which became a patchwork of different laws. Some EU members adopted very strict laws and others more liberal. Also, the members of the European Union did not recognize each other's electronic signature laws. That caused a lot of confusion and The European Union could not move forward towards a united solution.
Everything changed when in 2011, the European Commission decided to repair the law and create a united European digital market. After reviewing the Electronic Signature laws in European Union countries, in 2014 the European Commission adopted a new regulation termed eIDAS. The goal of the new law was to ensure security and confidence in Electronic signature, therefore creating mutual Electronic signature recognition system through all the members of the European Union. eIDAS regulation took effect on July 2016 and it works as a single standard regulation which is effective in 28 European Union member states and Switzerland.
Under eIDAS, an electronic signature cannot be denied legal effect and admissibility just because it is electronic. However, the regulation acknowledges that, depending on the technology and validation behind the signature, some types of signatures are more trustworthy than others and withstand higher legal scrutiny. That is, they are more reliably linked to the person signing the document, can protect the integrity of the document and, at the highest level, can carry the same legal effect as a handwritten signature.
Yes. Since the passage of the United States' Electronic Signatures in Global and National Commerce Act in 2000, digital signatures have been legal in every state where federal law applies. When it does not, most states in the USA have adopted the Uniform Electronic Transaction Act. It means that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form”.
Because it is faster and better for the environment. By signing digitally, you can save up to 45 minutes of work per contract, spare your teams from unnecessary paperwork. The added benefit is the secure and swift time to last signature i.e. have your contracts returned with a signature within maximum 24 hours after being sent.
You are not able to dismiss a digital signature US and in the EU just because it is digital. However, that does not mean that a digital signature cannot be challenged in court or proven invalid. To be certain that a digital signature is valid, you should ensure that the following criteria is met:
- The signature should be uniquely linked to the signatory, and capable of identifying the signatory. When signing with Contractbook’s advanced digital signature, you are using your email address and your phone number which links the signature to the person having access to these. In addition, a supplement of metadata can be used to track the location and the device of the signing process.
- The signed document should be sealed in a way that any subsequent change in the data is detectable. That is secured with Contractbook’s document sealing process.
Contractbook’s digital signature is both quick and safe. It meets all the criteria defined above, and it works super efficiently. At least that is what our customers say.
One company says that our digital signatures save them up to 45 minutes per contract. Others like that they have all of their contracts returned after a maximum of 24 hours. Then there are those who value how we reduce their carbon footprint.
The reason is that we are committed to planting a tree for every 100th digital signature transacted on our platform. That means you are not only saving trees by not printing your documents on paper, you contribute to planting new ones as well.
Did we mention that it is free to use?
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