E-Signatures and What Makes Them Legally Binding

The digitalization of almost all facets of human endeavors is no more breaking news. From online financial transactions to even online shopping, everything has grown above what they were back then in the stone age.

It is not only financial and online shopping that has gone digital, but even signatures have also been digitalized, and it now becomes what we have today as electronic signatures or E-signatures.

What Exactly is an e-Signature?

Similar to your inked signature, e-signatures are a unique and digital way through which you affirm your consent to a document.

In contrast to your inked signature, e-signatures are usually multi-dimensional – meaning that there are various ways through which you can sign an e-signature – even a free electronic signature.

One of the ways to sign an e-signature involves the use of an e-signing tool using a mouse to either click or draw the e-signature. However, having an e-signature on a document doesn’t mean that it is legally accepted or rejected, but its acceptance or rejection depends on several factors as we shall see shortly.

The Legal Validity of Electronic Signatures?

Yes, e-signatures are increasing gaining wide acceptance and popularity. In fact, e-signatures are highly binding in the US, most third European countries as well as other countries of the world.

However, one question remains – does an e-signature on a document making such a document legally valid?

Well, although there is no direct answer to this question, the fact remains that a document with an e-signature is potentially valid as a traditional ink-signed document. Nevertheless, before a document with an e-signature is termed to be legally binding, it has to possess three important elements thus:

#1: The Identity of the Signatory

For any document with an e-signature to be legally binding, the identity of the signatory has to be verifiable. In most cases, the ID of the signatory can be verified through various methods such as the use of an electronic ID, SMS or Email.

However, it must be mentioned here that none of the aforementioned methods of verification is 100% secured.

#2: What Was Signed and the Intent for Signing

The next element that affects the legal status of an e-signature is in the content of the document signed. Secondly, the intention of the signatory also has a lot to say when it comes to showing whether a document with an e-signature is legally binding.

In such cases, if there is more than one party that is expected to sign a document, then the document is deemed legally binding once all parties involved have signed and the final signatory with an e-signature sign to show agreement to the content of the document.

#3: The integrity of the e-signature

By integrity, an e-signature is assessed for any form of change after it was signed.

More so, for a document with an e-signature to be legally binding, it has must be kept intact without any form of modification after the parties involved have signed it.

For e-signature based on Public key infrastructure (PKI), such a document has to be hashed and signed with an asymmetric encryption key pair. With this, the integrity of the document remains intact such that a slight alteration on it will generate a different hash value entirely, which can easily reveal that some alterations have been carried out on the document.

Bottom Line

The current rise in the popularity of e-signature comes with equal discrepancies regarding the legal status and validity of a document with an e-signature.

However, there are a number of vital elements that are expected of a document with an e-signature to be legally binding.

Among these are the identity of the signatory if it can be verified, the content as well as the intent of the document and finally the integrity of the e-signature for any form of alterations.

Where a document with an e-signature is lacking in any of the above elements, it is obvious that such documents cannot be honored or tendered for some legal decisions.

If you have any questions, please ask below!