What Is Electronic Signature (E-Signature)?

Definition

An electronic signature involves using a digital element to indicate agreement with the terms of a contract being signed. Unlike a ‘wet signature’ made with a pen on paper, electronic signatures are generated on devices like computers, tablets, and smartphones. This contemporary method of signing contracts has been widely embraced globally, allowing electronic signatures to be used for signing various types of documents in 2024.

Electronic signatures offer an alternative method for consenting to or approving contracts and documents, eliminating the need for a traditional handwritten signature. They involve using a digital mark or symbol to indicate that the person creating it agrees to the terms of an agreement, similar to how a physical signature functions, but in a digital format.

What is the function of an electronic signature?

The primary goal of electronic signatures is to enable individuals and businesses to sign documents securely and efficiently online, ensuring legality without the need for face-to-face meetings. This allows signatories to finalize agreements, establish partnerships, and set terms remotely, using digital devices in a flexible environment of their choice.

What is accepted as an electronic signature?

An electronic signature is any electronic method that shows a person agrees to certain terms. It’s important that the person clearly intends to sign, often by placing their signature in a designated box on a digital document. Different places may have specific rules about what makes an eSignature valid, so it’s essential to check before using them.

Types of electronic signature

1. Simple electronic signature

Digital signatures, like those in emails, cannot be used for public or government online services, nor can they definitively verify the identity of the signer.

2. Advanced electronic signature

An advanced electronic signature meets these criteria: it is unequivocally connected to the signer, allows for identification of the signatory, is created using data that the signer can confidently control, and is linked to the signed data to detect any alterations later on. Such signatures can securely be used for signing contracts, letters, emails, or other digital documents online, and are legally recognized in court as evidence that a specific person signed a particular document.

3. Qualified electronic signature

A qualified electronic signature, generated using certified electronic means, holds the same legal weight as a handwritten signature. For instance, an employment contract signed electronically with a qualified electronic signature, backed by a certified certificate, complies with the written form requirement stated in Article 14 of the Labor Act under eIDAS provisions. In essence, such a contract is considered equivalent to a paper contract signed manually.

Who uses electronic signatures?

Electronic signatures are commonly used in businesses across various departments. For instance, sales representatives often electronically sign agreements to close deals remotely, without meeting clients in person. Similarly, talent teams can add electronic signatures to employment contracts and offer letters when hiring new employees. By signing contracts online, teams like yours can expedite the signing process, offering more flexibility in when and where agreements are finalized.

How to create an electronic signature

The best way to create an electronic signature professionally is to use a specialized electronic signature tool. These tools, like Juro or DocuSign, are specifically designed for signing contracts and offer a wide range of useful features.

Some businesses may use different tools for signing contracts, depending on where they store their contracts and the format they use. While there are free eSignature methods available, they often lack the advanced features that legal and business teams require to manage contracts effectively. The experience for the other party involved in signing the contract is often not a priority in these free methods.

To enhance the eSigning process, a better approach is to use a contract management platform that includes built-in eSigning capabilities. This option provides more comprehensive contract management features and improves the overall signing experience for all parties involved.

Can electronic signatures be used as evidence in court?

Yes, electronic signatures can be legally accepted in court, similar to traditional ink signatures, provided they meet the specific criteria mandated by the jurisdiction.

Do electronic signatures require a witness?

Under English law and in many jurisdictions, most contracts do not require witnessing, whether they are signed with a traditional wet ink signature or electronically.

However, there are specific situations where legal documents must be witnessed upon signing, such as for property transfers, security agreements, and various types of deeds like shareholder agreements, loan documents, and asset transfers.

In some cases, parties may choose to have electronic signatures witnessed for added security. Similar to traditional signatures, electronic signatures can be witnessed to ensure these agreements are legally valid.

What are electronic signatures used for?

1. Sales

Allow your teams to concentrate on sales by relieving them of manual, repetitive administrative duties.

2. Financial services

Securely capture and share sensitive information with seamless, paper-free experiences that today’s customers anticipate.

3. HR

Boost employee efficiency and please job applicants by allowing them to conveniently access and electronically sign documents from any location.

4. Life science

Modernize and streamline your document and e-signature processes to enhance efficiency while safeguarding patient confidentiality.

5. IT

Allow teams and departments throughout your organization to use fully digital, automated workflows for e-signatures and approvals.

Is typing your name sufficient for an electronic signature?

Certainly, electronic signatures can be produced by typing your name into a contract, electronically pasting your signature, or employing another form of markup that complies with the regulations.

Can electronic signatures be counterfeited?

Electronic signatures are generally more secure against forgery compared to wet signatures. This is because wet signatures are easier to forge and alter, while electronic signatures often include additional security measures such as digital signatures.