How Do Electronic Signatures Legally Bind You?

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Electronic signatures (also known as "eSignatures" or "e-signatures") have become increasingly prevalent as remote work becomes more popular. Organizations must continue to operate and get legally signed documents even if workers work from home.

Purchases must still be approved, new hires must be onboarded, and invoices must be approved. Users can sign electronic documents online using their mouse, stylus, or touchscreen device with e-signatures. Businesses can still enforce corporate policies and effective governance.

Electronic signature software speeds up these routine tasks because no printing, signing, scanning, or filing is required. Managers can even sign off on a purchase order or a recruit using their mobile device at any time and from any location.

Are electronic signatures, on the other hand, legally binding?

What is an Electronic Signature?

In digital communication, a digital signature ensures the authenticity of an electronic document or message by employing encryption techniques to offer verification of original and unaltered material.

E-commerce, software distribution, financial transactions, and other circumstances that rely on forgery or tampering detection techniques use digital signatures. An electronic signature is also known as a digital signature.

The following is how a digital signature is applied and verified −

  • The public key is shared with the end-user by the document or message sender (signer) or the public/private key supplier (s).

  • The sender adds the encrypted signature to the message or document using his private key.

  • The end-user decrypts the document and checks the signature, confirming that the intended recipient sent the document.

Digital Signature vs. Electronic Signature

Although the phrases digital signature and an electronic signature may appear interchangeable, they are not the same and should not be mistaken. One way to put it is that while all digital signatures are electronic signatures, not all electronic signatures are digital signatures.

In most cases, a digital signature is more secure than other electronic signatures. At its most basic level, an electronic signature allows someone to sign a document with their name on it. Digital signatures take things a step further by confirming that the person signing is who they say they are. An individual must first give a type of certificate-based authentication before digitally signing something.

A password or PIN must be provided, and the signer must have access to a private key.

Comparing a signed and notarized paper document against a signed paper document that has not been notarized is another approach to comprehend the difference between a digital signature and an electronic signature. Someone writes their name or marks a physical piece of paper when they sign it. There's no way to verify they're who they say they are or that someone else didn't forge their name if they sign in the privacy of their office or home.

Electronic Signatures − Are They Legal?

Now that you know what e-signatures are, you're probably interested in their legality. Yes, you can sign a document with an electronic signature, but does that make it legal?

In thirty European countries, the United States, and the great majority of countries worldwide, electronic signatures are legally binding. An electronic signature on a paper document can have the same legal weight and effect as a pen-and-ink signature.

In all countries where e-signatures are legally enforceable, establishing the presence of these three elements is required −

Who Has Signed?

This is the point where the signatory's identity must be verified. Identity verification can be done in various ways, including SMS, email, and electronic ID, such as BankID in Sweden. The higher the level of security provided by the approach, the stricter the identification control is.

Furthermore, a great deal of data regarding each contract interaction is recorded and logged. Remember that none of these identification methods is entirely safe, even though digital is almost always preferable to analog!

What Was Signed and with What Intent?

The document's content and the parties' intent are the following factors that influence the legal validity of a signed document. What was it that was signed? Did the contract's invitees intend to sign and legally bind themselves to the document?

This is when the contract's content and the parties' statements in the signed form of the instrument become important. If a contract's text changes before it is signed, the new contract offer becomes the new contract. If more than one party has been invited to sign the paper, the contract is only signed once everyone has agreed on the content.

Integrity of eSignatures

Has the document been tampered with or amended after it was signed? After signing, the document integrity is the final component that establishes the legal status of an electronically signed document. This means that the document must be retained intact after the parties have signed it and must not be altered or tampered with.

The document is 'hashed' and signed using an asymmetric encryption key pair when utilizing an electronic signature based on PKI. The hash value serves as a unique fingerprint for the document. The document's integrity is safeguarded in such a way that even a minor modification in the document, such as the addition of a comma, a point, or a space, results in a completely different hash value, indicating that a change has occurred.

Criteria for an e-Signature to be Legally Binding

As you can see, not every electronic signature will be deemed legally enforceable. Obviously, you can't merely photograph your signature on a piece of paper, crop it, and then put it into your paperwork to make them "legitimate." This method will not give adequate evidence because someone else can easily copy-paste information from one document to another.

The capacity to establish who used an electronic signature, their identity and the signed material that has not changed after signing will determine its legal worth.

Updated on 30-May-2022 10:17:21