Are Electronic Signatures Legal?
Electronic signatures (e-signatures), which demonstrate an individual’s intent to agree to something, aren’t new. Their acceptance and use in many countries around the world have been widespread for years. Over a billion users worldwide are comfortable signing documents electronically. But, are electronic signatures legal?
The short answer is yes, electronic signatures are legal. But what this question is really getting at is whether an e-signature can create a binding and enforceable contract. And, again, the short answer is yes. Electronic signatures are widely recognized and accepted throughout the industrialized world, and they are also more secure than traditional paper-based signatures and thus less susceptible to forgery.
In this blog post, we’ll cover what makes e-signatures legally binding, whether they’re valid in the US, whether there are exceptions, what exactly is an e-signature (a lot of people think it’s a digital image of the “squiggly line,” i.e., your wet signature, but that’s not the case) and more.
What makes an electronic signature legally binding?
In 2000, the U.S. federal government passed the Electronic Signatures in Global and National Commerce Act (ESIGN), which in tandem with the Uniform Electronic Transactions Act (UETA) confirms that electronic signatures constitute legally binding documents if all parties choose to sign digitally.
In fact, when e-signatures are combined with tamper sealing, strong authentication, world-class security and an audit trail, they can be more enforceable than wet signatures because of the court admissible evidence they contain.
That said, like anything in life, there are some exceptions (see the next question “Can legal documents be signed electronically?”). However, it’s not that e-signatures can’t be used in these situations but rather that they may be subject to additional legal requirements in order to be enforceable. You should always refer to laws in your jurisdiction regarding your specific e-signature use case.
Can legal documents be signed electronically?
Electronic documents and signatures are broadly enforceable for business and personal transactions in industrialized countries around the world. Many legal documents can also be signed electronically, including:
- Litigation filings and documents, such as deposition transcripts, pleadings, motions, affidavits and settlement agreements. (Please check local court rules regarding electronic signature permissibility)
- Transactional documents, such as closing documents, disclosures, financings, legal filings, NDAs, real property transaction documents
Here are some use cases that are not typically appropriate for e-signature or are not covered by ESIGN or other country-specific laws, such as the examples below. You should seek legal advice as to whether e-signatures are allowed in these situations and what the requirements are:
- Wills and other estate documents, family law matters, certain court orders and official court documents
- Certain business use cases such as cancellation of utility services, termination of health/life insurance benefits, health/safety recalls, handling of toxic materials and notices regarding primary residence (e.g., a foreclosure)
Are electronic signatures valid in all states?
Yes, electronic signatures are valid in all U.S. states and are granted the same legal status as handwritten signatures under state laws.
The District of Columbia, Puerto Rico, the Virgin Islands and 49 states have adopted UETA, and most of these have made few, if any, modifications to UETA. Only Illinois maintains its own independently developed laws, but they are consistent with UETA.
However, even with the slight differences among the states, there is enough consistency to permit all businesses to adopt a single process for electronically signing agreements across the country for most use cases.
Learn more in the "Electronic Signatures and Transactions in the U.S." whitepaper.
What is the difference between a digital signature and an electronic signature?
The terms “digital signature” and “electronic signature” are often used interchangeably, but they are actually different.
Digital signatures are a specific type of e-signature that has an additional signer authentication element. Digital signatures include a “digital certificate” that is issued only when the identity of the signer is validated, and they use a type of encryption called public key infrastructure (PKI) to associate a signer with a document and provide additional assurance as to the signer’s identity.
E-signatures, on the other hand, cover the full range of technologies and solutions to create signatures electronically, from simple images of a signature attached to an electronic document to PKI-based signatures. A variety of capture methods can be used, such as:
- Typing your name in a signature box
- Signing your name on a courier’s digital device
- Using an e-signature solution like DocuSign eSignature
The extra steps needed to obtain a digital signature are unnecessary for many transactions in the U.S., so they are rarely used. An electronic signature, like those supported by DocuSign eSignature, is typically all a customer needs to create a legally enforceable document. For those instances where more authentication is required in the U.S. (e.g., certain transactions in regulated industries such as life sciences), tools like DocuSign standards-based signatures, can be used to digitally sign a document. This also applies to regions like the European Union, where digital signatures are more common.
The best approach is to evaluate whether there’s a need for a digital signature, and if not, why complicate things? Keep it simple—especially since a DocuSign eSignature without the digital certificate is just as secure and will always include the DocuSign Certificate of Completion.
Is DocuSign eSignature legally binding?
DocuSign eSignature can help you comply with ESIGN, UETA, eIDAS, and other national laws worldwide, enabling you to sign agreements that are legally enforceable.
For each document, DocuSign eSignature automatically generates and stores a complete, time-stamped history of every send, view, print, sign or decline action. This audit trail is captured in a Certificate of Completion for each transaction that provides the proof for legally binding electronic signatures.
More than 1,000,000 customers around the world use DocuSign eSignature to:
- Verify signer identities with multiple forms of authentication
- Confirm signer intent to sign electronically
- Link signatures to signers and documents
- Record all important document and signature activities
- Allow ongoing, secure access to DocuSign documents
- Protect documents with tamper seals that use a combination of secure system processes and PKI
DocuSign also offers advanced features, including multiple built-in, advanced authentication tools in DocuSign eSignature, as well as PKI-based signature options for complying with EU law like eIDAS and industry-specific regulations like FDA 21 CFR Part 11 in life sciences and U.S. State Professional Engineering Seals for architecture, engineering and construction.
For more on the admissibility of DocuSign eSignature and electronic signatures overall, read DocuSign’s “Court Support for Electronic Signatures in the United States” whitepaper.