Electronic Signatures 101
Everything you’ve ever wanted to know about electronic signatures and document security
What is an electronic signature?
An electronic signature, also called an eSignature or e-signature, can take any electronic form as long as it is attached to a record that has been adopted by the person who intended to execute it.
How does it work?
An electronic signature can work in a variety of ways. You are probably most familiar with it when signing with a stylus pen on a touchscreen to complete a purchase at a store. In other instances an eSignature could just require typing your name on a document. It may even simply be an electronic acknowledgment by entering information or numbers that are unique to you.
With PandaDoc, your electronic signature is encrypted and each completed document generates a unique signature certificate. Once signed, the document cannot be altered.
What makes an electronic signature different from a regular paper one?
Aside from the obvious physical differences, the most notable difference is convenience. Electronic signatures allow you and any other parties involved in an agreement to skip the time-wasting and resource-wasting print-sign-scan-reprint cycle. Of course, laws do vary by country as to the strength an electronic signature holds.
What makes a digital signature different from an electronic signature?
A digital signature essentially provides another layer of security to electronic signatures. It uses encryption algorithms that contain metadata used to validate the authenticity and integrity of an eSignature.
Both digital and electronic signatures are legally enforceable in the U.S., Canada, the U.K., Australia, and dozens of other countries.
What’s the difference between a secure eSignature and an insecure eSignature?
With PandaDoc you can feel secure as our technology encrypts your signature, contains an audit trail, and is verifiable. Documents executed using PandaDoc can not be altered.
An example of an insecure eSignature would be using a .jpg file of your handwritten signature and copying and pasting it into a document.
Can you file U.S. taxes with an electronic signature?
Yes. Taxpayers are allowed to use a Personal Identification Number (PIN) to sign individual income tax returns and the Declaration of Taxpayer.
Can you notarize a document with a digital signature?
Yes, but in order to have your document notarized you must use the services of an eNotary who is a notary public that notarizes documents electronically. Rather than checking your identification, they validate your identity with a digital certificate.
Are e-signatures legally-binding?
Absolutely. The Federal E-SIGN Act was passed in 2000 to simplify conducting business online.
“Electronic signatures have been one of the biggest barriers to the growth of electronic commerce. This bill fixes this problem by ensuring electronic signatures carry the same legal protections and guarantees as written signatures,” Rep. Bliley stated in a 1999 press release.
The bill separates contracts into three categories: estate planning/family law, securities transactions in interstate commerce, and everything else.
The act declared that electronic signatures in interstate commerce “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”
Are there any specific terms or restrictions to know about?
There are a few specifics to ensure when it comes to electronic consumer transactions.
The law states: “If a statute, regulation or rule of law requires information to be provided in writing, the use of an electronic record will suffice only if the consumer has affirmatively consented, the consumer is provided with prior notice regarding his rights to receive a written record and to withdraw consent, and the consumer has the software and hardware necessary to read and save the electronic record.”
As long as the consumer knows the agreement terms, can save the record and approvals, the deal is good.
Does the law vary by location?
Electronic signatures are legally enforceable in the U.S., Canada, the U.K., Australia, and dozens of other countries.
Which documents must be on paper?
According to the law, the following documents must be on paper to be legally binding:
- 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
Proposals, business deals, sales contracts and most other agreements and documents are OK to be signed electronically.
Disclaimer: Our overview of electronic signature laws should not constitute as legal advice. This is for informational and educational purposes only.