Electronic signatures are a valuable tool that simplifies the management of documents and contracts. However, companies and professionals are often reluctant to adopt them because they are uncertain about their legal validity.
To understand if electronic signatures are legally binding, we need to investigate how they work.
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What is an electronic signature?
Usually, the electronic signature is the digitized version of the common handwritten signature. Unlike the handwritten signature, you can use it to sign documents online or digital, without printing and scanning them. However, the electronic signature is not necessarily a digital copy of your real signature: it can also be a checkbox, en emoji or even a sound!
There are 3 types of electronic signatures available in Europe:
- Simple electronic signatures (SES)– It is the simplest but also the one that gives fewer guarantees. It could be a tick box plus declaration, your name on a document, or a scanned signature.
- Advanced electronic signatures (AES)– It uniquely links the signature to the signatory, but it also detects any changes to the data. It usually involves the use of certificates and cryptographic keys.
- Qualified electronic signatures (QES)– It is created by a qualified electronic signature creation device and based on a qualified certificate for electronic signatures. It is the most secure, based on data that proves the identity of the signatory.
Electronic signatures and digital signatures are the same thing?
Although they seem synonymous, electronic signature and digital signature are two different but overlapping concepts.
The electronic signature is mainly used to certify the acceptance of a contract or the content of a digital document, such as a pdf. As the existence of the SES demonstrates, the electronic signature does not necessarily guarantee the authenticity or inalterability of the document.
Instead, the digital signature certifies its own authenticity, the inalterability of the document, and therefore protects against forgery. This is possible through what is called a “hash function.” A hash function is a mathematical algorithm that takes the digital signature and produces a unique string of numbers and letters, called a “hash.” This hash is then attached to the document. When someone opens the document, the software will run the same hash function on the digital signature. If it produces the same hash, then the document has not been tampered with. If it produces a different hash, then the document has been tampered with.
For these reasons, AES and QES are considered digital electronic signatures.
Are electronic signatures legally binding?
In general, the answer is yes, since the electronic signatures certify the authenticity, integrity, and non-repudiation of a documents. Furthermore, electronic signatures are admissible in court as they demonstrate a willingness to accept the content of the document. In addition, they can also provide more information on the intentionality of the signature than handwritten signatures. Indeed, an electronic signature contains data that a handwritten signature does not contain, such as the IP address, location, or date/time.
However, the legal validity of the electronic signatures depends on the single country legislation. Most countries have laws that recognize electronic signatures as legally binding, but others don’t. And even in countries that recognize electronic signatures, regulations can vary. So, it is always a good idea to check local rules.
To help you, here is a brief overview of the regulatory references in Europe and the United States:
European Union – eIDAS Regulation
The European Union has been a pioneer in the field of electronic signatures with the eIDAS Regulation (electronic IDentification Authentication and Signature). This 2014 regulation came into force in 2016, replacing the old Directive 1999/93/EC.
In Chapter I, art. 3, the eIDAS Regulation (or EU Regulation No. 910/2014) defines the electronic signature as “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign”.
The eIDAS sets the three different electronic signatures we saw above: simple electronic signatures, advanced electronic signatures, and qualified electronic signatures. It also contains provisions on other aspects such as certification services, time stamps, and seals. Moreover, it establishes the non-discrimination of electronic documents compared to paper documents. Therefore, the legal effect of an electronic signature is equivalent to that of a handwritten signature.
Remember that a qualified electronic signature based on a qualified certificate issued in one Member State is recognized as a qualified electronic signature in all other Member States. Indeed, the eIDAS Regulation applies to all member states of the European Union.
United States – ESIGN Act
In the United States, electronic signatures have the same legal value as handwritten signatures thanks to the ESIGN Act.
The Electronic Signatures in Global and National Commerce Act (ESIGN) sets out the rules for electronic signatures and records in the United States. It applies to all 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands.
The act defines the electronic signature as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record”.
The act ensures that eSignatures:
- can be used as evidence in a court of law,
- are as legally valid as wet signatures,
- the effect, validity, and enforceability of electronic documents are not denied.
It also contains provisions on other aspects, such as time stamps and certification services.
In addition to the 2000 ESIGN Act, another regulation provides a legal framework for electronic signatures per state: the 1999 UETA (Uniform Electronic Transactions Act).
How to activate a digital electronic signature. The solutions by Namirial
The use of digital electronic signature is great for signing digital contracts and pdf documents. This helps company’s digital transformation, making workflows faster and more efficient, reducing management costs and ensuring legal validity.
In order to have a digital electronic signature, you must rely on accredited trust service providers. Namirial is one of them and offers several solutions:
- No shipping required;
- No device needed;
- Do everything with your smartphone;
- 3 years duration
- Cost: € 49 + VAT.
Signature on Smart Card
- Shipping included;
- Ideal for fixed workstations;
- 3 years duration;
- Smart Card (without USB reader): € 49 + VAT;
- USB reader (without Smart Card): € 25 + VAT;
- Complete kit (Smart Card + USB Reader): € 69 + VAT.
Signature on USB Token
- Shipping included;
- Usable on any computer;
- 3 years duration;
- Sim Card (without USB Token): € 49 + VAT;
- USB Token (without Sim Card): € 25 + VAT;
- Complete kit (Sim Card + USB Token): € 69 + VAT.
After purchase, you can activate the digital electronic signature by identifying yourself via webcam or other digital signature you already have. Both methods come with no additional costs and are available 24/7.