Are electronic signatures legal? What you need to know

Are electronic signatures legal? What you need to know

Nothing kills the momentum of a business transaction like paperwork. The process of printing a document, scanning it, revising it, and either setting up an in-person signing event or mailing it can eat up all of your precious prospecting time. And given the prevalence of COVID-19, it’s extremely rare that a sales professional would even consider transacting in-person, making electronic signatures (A.K.A. eSignatures) the perfect solution. 

There’s more to eSignatures than simply capturing an image of your signature. In this article, we’ll take an in-depth look at the many benefits of eSignatures and everything you’ll need to know in order to optimize their functionality

What are eSignatures?

Electronic signatures are virtual representations of a wet-signature, one your signer would create with a pen and paper.

Similar to the wet-signature, eSignatures are used to identify signers and signify that they agree to the terms outlined above the signature line.

eSignatures are extremely versatile. They enable the recipient to conveniently sign documents by typing their name out or simply scrawling it with a finger or stylus directly through a mobile app on their iOs or Android smartphone to complete the signature image. 

It’s worth noting that the terms eSignature and digital signature are often used interchangeably despite their notable differences. Digital signatures, also called cryptographic signatures, are a type of electronic signature that is coded and encrypted in order to prevent the impersonation of a signee, tampering, and improve the overall security overall of every signed document.

Most of the time, a digital signature is a slightly more accurate term when referring to electronically signing documents. However, the term eSignature is much more recognizable and frequently used.

Are eSignatures legitimate?

eSignatures have risen in popularity since 1999, in fact, several countries have categorized them as equal to pen-and-paper signatures. This includes the U.S., thanks to the Electronic Signature in Global and National Commerce Act of 2000 (ESIGN) and the Uniform Electronic Transactions Act (UETA).

These Acts state that electronic signatures have the same legal standing as pen-and-ink signatures on a piece of paper. 

Despite the widespread adoption of electronic signature, there are still a few occasions in which tactile documents and handwritten signatures must be used:

  • Wills, codicils, and testamentary trusts
  • Adoption, divorce, and family law
  • Court orders or notices, and official court documents, including briefs
  • Notice of cancellation of utility service
  • Any notice regarding an individual’s rental of his primary residence
  • Notice of cancellation of health or life insurance
  • Notice of recall
  • Documents required to accompany the transportation of hazardous materials

In the U.S., you can even notarized documents without the headache of printing, signing, scanning, and sending. eNotaries are able to verify your identity with a digital certificate — no in-person appearance required.

eSignatures are also afforded the same legal weight as handwritten signatures in many places outside the U.S. These include Canada, Australia, New Zealand, Chile, Columbia, Peru, South Africa, and many other Asian and European countries.

Are eSignatures secure?

The idea of putting any personal information or important documents on the Internet can be a bit scary for some customers. However, the security measures tied to eSignatures have come a long way since their inception, which is why they’re trusted by small businesses and enterprises alike.

Words like “public key infrastructure”, “algorithm”, “signing certificate”, and “certificate authority” repeatedly pop up in reference to electronic signature files.

A lot of behind-the-scenes technological stuff happens when you double-click the new signature button on an electronic document in order to make sure the signers are who they say they are and that the information within every file format remains secure.

When you couple this added level of security with the convenience of eSignatures, the question of “why use them?” becomes “why am I not using them?

The key to using eSignatures is to pick a reputable service that’s willing to explain the security measures it has in place for when your recipients fill & sign documents. PandaDoc’s eSignature solutions generate unique certificates of authority that note all of the signatures on the agreement, IP addresses, the date(s) and a timestamp, so you have an in-depth audit trail for all of your electronically signed business pdf documents, word documents, or image file (png, jpg, and adobe are all supported).  

Final thoughts

There’s a laundry list of reasons as to why you should start using eSignatures, but the most obvious is convenience—not only for you but for your clients. If your clients don’t have to carve out time to print, sign, and scan or mail documents back to you, they can get things done faster, which translates to you closing more deals. 

This gives you an edge over competitors who haven’t fully committed to the transition to online documents. Due to COVID-19, may businesses are struggling to shift to remote work. Implementing an electronic signature software will undoubtedly make the transition easier. Signing documents online also means you cut down on resource waste, like printer cartridges, paper, envelopes, postage, and postal workers who risk their health for the transportation of inessential mail.

eSignatures have been given the same legal weight as handwritten signatures in countries all over the world due to the rapid monetization of eCommerce, these unprecedented times, and the new technology available that has made eSignatures a safe, convenient option that’s swiftly becoming the norm, instead of a novelty.

Originally published December 26, 2017, updated May 19, 2020

Emily Roberts

Emily Roberts Content Associate at PandaDoc

Emily is a Content Associate at PandaDoc. She's passionate about creating content that converts, SEO, and true crime podcasts.

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