What counts as an electronic signature?
This guide takes a closer look at electronic signature law to explain how e-signatures are interpreted as a part of federal law and what that means for signers.
You might be surprised to learn that electronic and digital signatures receive a wide range of flexibility under the law.
The legal definitions for digital signatures are loose, and the documents used to define those terms in both Europe and the United States are remarkably consistent.
What are electronic signatures?
Let’s take a look at three cornerstone documents and how they define electronic signatures.
The Federal Electronic Signatures In Global and National Commerce Act (ESIGN Act) of 2000 defines electronic signatures this way:
Electronic Signature — The term “electronic signature” means 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.
Meanwhile, the Uniform Electronic Transactions Act (UETA), which has been adopted by 47 U.S. states, agrees by defining e-signatures like this:
“…an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”
Finally, the eIDAS Regulation solidifies electronic signatures and digital signature adoption across the European Union with this broad definition:
“…electronic signature” means 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.
So what does this mean for individuals and businesses using electronic signature solutions and processes to sign documents?
In short: Any “sound, sign, symbol, or process” that can be logically associated with a signer’s identity and their intent to sign a document can be used to authenticate, validate, and enforce an electronic record in a court of law.
Because of these rules and restrictions, an electronic signature doesn’t have to resemble a traditional signature in any way, shape, or form. It could be a typed signature, a symbol of some kind, or some other form of consent in regards to intent.
Electronic signatures vs handwritten signatures
Given the fluidity of electronic signatures, you might wonder how they compare to handwritten signatures.
Unfortunately, the answer can get a little complicated.
In most cases across the United States, electronic signatures are commonly recognized as a legal replacement for handwritten signatures.
However, in some specific cases, such as the creation and execution of a will, specific legal practices like family law (adoption, divorce, etc.) handwritten signatures are still required to conduct the business of the day.
In Europe, only “qualified electronic signatures,” an advanced type of electronic signature that is created via the use of a digital certificate and certificate authority, have the same legal effect as a handwritten signature.
When in doubt, a pen-and-ink signature is still a valid option. If you’re worried about enforceability, handwritten signatures for your business transactions also alleviate this problem, though acquiring such a signoff may be impractical if you’re conducting business at a distance.
Are electronic signatures safe?
On the whole, electronic signatures are extremely safe.
Despite the broad scope of the law as portrayed in the ESIGN Act and the UETA, most companies and e-signature solutions have taken steps to refine the e-signature process for digitally signed documents.
Electronic signatures are ideal for modern companies because they make it easier than ever to conduct business in a digital format.
Especially when using an e-signature software solution like PandaDoc, businesses, and signers can enjoy the safety that comes with adding asymmetric encryption to the signing process.
This form of encryption uses public keys and private keys to allow safe and open distribution of contracts and essential documents without compromising security.
As long as outbound links are issued to the right individuals (typically via email), contracts are encrypted and tamper-proof. Many modern signing solutions also create time stamps for user activity by means of an audit trail that shows when users accessed and signed their documents.
These safety features are important for proving the validity of a signer’s signature, and record retention is easier than ever because all files are in a digital format.
Electronic signatures are safer than a handwritten signature because of the burden of proof that is required to provide the validity of the signature.
In order to hold someone accountable for an electronically signed document, a business must prove that the user signed the contract in the first place.
In addition to audit trails and time stamps, a business might also need to provide IP address information or user account activity and more if they claim that you’ve agreed to a specific contract.
For individual signers, this is great news because it takes more than a presentation of a written signature to prove that commitment.
How are electronic signatures captured and validated?
As we discussed above, an electronic signature can be any “sound, sign, symbol, or process” that can be logically associated with a signer’s identity and their intent to sign a document.
Most electronic signature companies are focused on creating a signing solution that feels similar to the signing process for handwritten signatures.
But how does a company know that the right user is signing the document — and how does it determine what ultimately counts as an electronic signature?
User verification methods
A company has a few different ways to verify a signer, but the most common method is through email access.
For example, when a company uses PandaDoc to send a contract, an email with a unique link is generated and delivered to the signer’s inbox.
Logically, the signer is the only user who has access to that inbox. When the signer clicks their unique link, this verifies the user and creates an audit trail that companies can use to prove the identity of the signer.
There are also other methods to verify users, including account creation and tracking, IP address monitoring, and two-step verification via text message at the time of signing.
Optimize your e-signing process with PandaDoc
As you can see, determining what counts as an electronic signature and ensuring that e-signatures are valid when signing can be a complicated process!
Fortunately, PandaDoc provides a fast and easy way to make sure that your contracts and signatures are always secure and above board.
Sign up for a free 14-day trial to see how you can create contracts, proposals, quotes, and more in record time.