Are eSignatures Legally Binding? Here’s What You Need To Know
Digital documents are increasingly common in all aspects of our lives. It’s quite unusual today to have to deal with paper docs. Emails replaced letters and forms went online ages ago. Physical, on-premise fax machines were made all but obsolete more than twenty years ago. However, the issue of validating official and legal documents with a signature was never solved satisfactorily in the digital age.
Isn’t it odd that most people still need to print, sign and scan a document, then email it back to the original sender, despite the fact that most households don’t even own a printer?
That process is tedious, wasteful and inconvenient. It’s also open to manipulation.
This is what makes a new generation of electronic signatures so useful.
What Is an eSignature?
An eSignature is a way of signing contracts, documents and other paperwork using your computer, smartphone or your tablet. A proper electronic signature is legally binding, which means you can sign official documents like:
- Insurance applications
- Insurance contracts
- Loan applications
- Loan agreements
- Employment contracts
- Private contracts like separation agreements
- School permission slips
- Job applications
- Bank account forms
- Business registrations
More and more, the government, businesses and municipal authorities are accepting eSignatures for official government forms including license renewals and health insurance sign-ups.
eSignature vs Wet Signature
A ‘wet signature’ is the term for a traditional, hand-signed signature that uses ink from a pen. Wet signatures are usually a version of the signee’s name in a stylized font and are characterized as being unique due to their handwritten nature.
Just as with eSignatures though, there are exceptions. Not every wet signature is a signed name in letters. Some stamps and markers are used as wet signatures too, including notary seals.
An electronic signature is any type of marker stamped on a document electronically. There are many ways you can sign a document electronically, they include:
- A hand-drawn signature using your finger or a stylus on a touchpad or drawing pad
- A mouse-drawn signature created by dragging your mouse across the screen
- A typed name
- A sound – either a recording or a sound that you have uploaded to represent you
- An image of your hand-drawn signature on paper which has been uploaded and saved to the document
Both wet signatures and eSignatures are equally valid in most cases. One key aspect of both is that it must be clear who the person signing the document is, and it must be clear that they intended to sign the document in question.
What Makes an Electronic Signature Valid?
In the USA, electronic signatures are protected by two acts. The first is the Uniform Electronic Transactions Act (UETA), which says electronic records cannot be deemed inadmissible purely because they are electronic in nature.
The second is the Electronic Signatures in Global and National Commerce Act (ESIGN Act) which defines an 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 law states clearly that an e-signature is valid if there is:
- Clear intent to sign the document by the signatory
- Clear identifying information for the person or persons signing the document
- Consent to use a legally binding electronic signature and disclosure that one will be captured
Put simply, an electronic signature is valid if all the parties involved know that an electronic signature is being used, if everyone knows who signed the document and if it can be clearly demonstrated that the signatory meant to use an eSignature to execute the document.
If you use an online form to sign a document electronically, you will likely see a place to put your eSignature, as well as space to write or confirm your full name and address, and a checkbox that says: “You consent to use an electronic signature.”
These three items satisfy the needs above.
What Makes an eSignature Invalid?
If the conditions stated above are not met, then an electronic signature becomes invalid. This is uncommon in the modern age, but it can happen. For example, if you draw a signature and don’t type your name underneath it, then the e-signature may not be valid.
The other crucial aspect of a valid eSignature is Document Integrity. Document integrity means making sure the contract or form hasn’t been changed after it was signed. It also refers to how the record is kept, protected and tracked throughout its life.
An eSignature might be deemed invalid if a document bears evidence it was tampered with after signing, or even if there is a reasonable suspicion that it may have been altered because it wasn’t stored appropriately.
Let’s consider a Microsoft Word doc. You could “sign” the Word file by uploading an image of your signature to the bottom of a document stored in a shared folder on your company server. But shared word documents are too easy to alter, and it may not be clear enough that either party has agreed to use an electronic signature or intended to use one. In that case, a shared server is not “secure storage,”‘ which could invalidate the signature if it is tested at a future date.
You should know that word documents are generally considered poor candidates as legally binding documents with signatures because they are so easy to edit that it calls the integrity of the document into question.
Ways to Protect the Validity of an eSignature
The reason most electronic forms or documents require you to acknowledge that you’re using an esignature is to satisfy the consent and disclosure requirements of the E-SIGN Act.
Typing your name under the signature makes sure you have identified yourself properly as the signatory.
Email exchanges can help validate an e-signature too. For example, if you email a form to someone and ask them to sign it, and they return it to you with a typed, drawn or photographed signature attached and an email that says: “Hi, please find attached my signed copy of the agreement.” This can be considered proof of consent, identification and intent.
After that condition is satisfied, you can email the final copy of the signed document to all parties, which demonstrates that the version of a document bearing an electronic signature is the correct and authentic one.
The flaw in this process is that there ends up being multiple copies of the one document and no real way to determine which is the original and authentic version. If one or more in a set of duplicates is altered, it can be hard to track when and where the change was made. This means you can easily lose track of the “right” version or the most recent version if you make changes later.
Electronic signatures provide a way to track the history of your signed document easily.
Use a Dedicated eSignature Solution
The best way to create a legally binding and reliable electronic signature is to use a dedicated eSignature platform. eSignatures created by jSign are stamped by blockchain technology. This technology uses encrypted data packets that lock onto a chain of other data and create an immutable record of the signature. This means you can always find out who signed a document, when it was signed and what version they signed.
When you use the “Request a Signature” feature inside the web-based app, you can send documents to multiple parties. Each signature is given its own encrypted key, which locks in the time, version and signatory information as they sign your document. After everyone has signed the document, jSign issues a Certificate of Completion which gives you a link to the document, its history and the details of the signatories.
In short, dedicated electronic signature platforms like jSign make it easy to request, collect and provide traceable, reliable and binding esignatures in one convenient platform. You get a clear audit trail that you can rely on if you need it.
Ways to Protect Your Own eSignature
Just as you don’t want anyone forging your signature or autograph, you don’t want anyone to sign a document electronically while impersonating you. This is where dedicated eSignature platforms are truly valuable. Obviously, if you can type a signature, anyone can type your name — but when you use an eSignature platform that uses encryption to capture the time, location and identity of the person signing the document, right down to the IP address — that provides certainty it’s you and only you who is signing the document electronically in your name.
Validate Your eSignature Today
The old days of document signing were cumbersome and wasteful. It could take days to have a set of documents sent, signed and returned. Now, that process can happen within minutes.
jSign offers you a number of features that makes the process easy and safe:
- Add your signature to documents
- Send your contracts or forms out to multiple recipients to collect their signatures
- Ensure documents and the signatures attached are protected with technology that locks away the details of everyone involved – without breaching their privacy
- Track your documents through the signing process
- Get notified the instant everyone has finished signing, thanks to real-time notifications
If you’re ready for the convenience and safety of an electronic signature, then sign up for your free 14-day trial of jSign’s electronic signature solution today.
