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Are electronic signatures legal? What you need to know

Sales tips 3 min read

Few things slow down business transactions than unnecessary busy work. Printing a document, signing it, and then either scanning and emailing or (yikes!) snail mailing it back is just a time suck. That’s why electronic signatures (or eSignatures), have become so popular.

But there’s more to eSignatures than just putting your John Hancock on a screen. Here, we’ll take a look at what eSignatures are and what you need to know in order to use them wisely with your business documents.

What are eSignatures?

Electronic signatures are, obviously, virtual representations of a pen-and-paper (a.k.a. “wet”) signature. Just like the tactile version, eSignatures are used to identify signers and signify that they agree to whatever was outlined before the signature line. eSignatures vary in style, from names typed or scrawled with a finger, stylus pen, or mouse to uploaded images of a wet signature.

It’s worth noting that the terms eSignature and digital signature are often used interchangeably. However, they aren’t exactly the same. Digital signatures, also called cryptographic signatures, are a type of electronic signature that’s coded and encrypted in order to prevent the impersonation of a signee, tampering, and improve security overall.

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

Are eSignatures legitimate?

eSignatures have been picking up speed since 1999, and several countries have started adopting them as equal to pen-and-paper signatures. This includes the U.S. The Electronic Signature in Global and National Commerce Act of 2000 (ESIGN) and the Uniform Electronic Transactions Act (UETA) state that electronic signatures have the same legal standing as pen-and-ink signatures. With consumer transactions, the consumer must know the agreement terms and have the ability to save the electronic record.

See also: Electronic signature legality in the United States

There are a few instances 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 have documents notarized without the headache of printing, signing, scanning, and sending. eNotaries 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 Asian and European countries. Several other countries have laws around eSignatures that don’t equate them to handwritten signatures.

Are eSignatures secure?

The idea of putting any personal information or important document out into Internet land is a bit scary. However, eSignatures have come a long, long way over the years, which is why they’re trusted by organizations big and small.

If you take a deep dive into the world of eSignatures, words like “public key infrastructure,” “algorithm,” “signing certificate,” and “certificate authority” repeatedly pop up.

Basically, a lot of behind-the-scenes technological stuff happens when you sign a document electronically, in order to make sure the signers are who they say they are and that the information remains secure. Couple that added level of security with the convenience of eSignatures, and the question of “why use them?” becomes “why am I not using them already?”

The key with using eSignatures is to pick a reputable service that’s willing to explain the security measures it has in place. PandaDoc’s eSignatures generate unique signature certificates, which include 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 documents. Curious?

Final thoughts

There are a number of reasons why you’d want to start using eSignatures, but the most obvious is convenience—for you and 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 means you can get things done more quickly on your end as well.

This gives you a competitive edge over competitors that haven’t gone with the shift to online documents and makes your company look more modern. Signing documents online also means you cut down on resource waste, like printer cartridges, paper, envelopes, postage, etc.

eSignatures have been given the same legal weight as handwritten signatures in countries all over the world because commerce is happening faster than ever, and technology has made eSignatures a safe, convenient option that’s swiftly becoming the norm, instead of a novelty.

Sheree Whiteley

Sheree Whiteley

Sheree is a marketing copywriter and editor with an extensive background in content creation. She loves writing for a variety of publications and companies, distance running, and traveling as often as possible.

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