Transactions between small companies and their consumers, sellers, and service providers are increasingly taking place online rather than on paper. However, some people are concerned about the legality of these electronically signed agreements. Is an Electronic signature software as legally binding as a handwritten signature?
E-signatures are recognised as legal and enforceable under state and federal law: Most states have enacted the Uniform Electronic Transaction Act, and the federal government has enacted the E-Sign Act, which gives electronic signatures the same legal significance as traditional handwritten signatures in most transactions.
It reduces document approval procedures from weeks to minutes and makes tracking, managing, and storing documents more easier.
Although the statutes do not specify which technology or procedure must be used, there are many measures that must be taken to guarantee that your e-signatures are enforceable in the case of a dispute.
What Exactly Is an E-Signature?
An electronic signature enables a person to provide consent or demonstrate approval of the contents of a document. Electronic signatures, often known as e-signatures, can be legally enforceable for a variety of purposes.
E-signatures can take numerous forms, including typing the individual’s name, uploading a picture of the person’s cursive signature, or drawing a signature on the screen of a smartphone or tablet. Some electronic signatures make use of digital identifiers to ensure that the person signing a document is who they say they are.
Steps to Ensure Enforceability
Several processes should be put in place to guarantee the legality of electronic signatures that your company’s electronically-signed agreements are legally enforceable.
- Show the signing party’s apparent intention to sign electronically to demonstrate the e-signature authenticity. This intention can be acknowledged by including wording in the document requiring the signer to specifically consent to or deny signing the document electronically.
- Obtain the signing party’s permission to do business electronically. The signing party’s affirmative agreement to do business electronically prior to signing demonstrates intent to be bound by an electronic signature. Furthermore, if specifically denied, a clause in the electronic document allowing the signer the option to opt out of signing the contract electronically and instead sign a physical form will be significant proof of the signer’s permission.
- Implement a trustworthy means of confirming the signing party’s identity. The fact that the parties to the agreement may never have met in person complicates electronic transactions and increases the likelihood of falsification. The identity of the signing party can be confirmed by asking them to form a password-protected login, a PIN number, or by utilising a third-party service provider with its own verification technique.
- Keep all records needed by law. The electronic document and signature should be stored in a secure archive that protects its integrity by preventing unauthorised alterations and ensuring the agreement’s completeness. A record of all events and transactions linked to the agreement should also be preserved.
Ensure that the electronic agreement is sent to the other parties in a retainable and easily accessible format: The signing party should be given a copy of the final finished agreement, or at the very least be allowed to download one.
Note: Certain papers, such as testamentary documents, real estate conveyance paperwork, court documents, insurance cancellation notifications, and eviction notices, are often not authorised to be signed electronically.
Please contact We Signature if you want to learn more or if you have questions regarding whether your company’s online transactions are legally enforceable. As company law professionals, we can assist you in ensuring that your digital processes conform with electronic signature legislation and that all of your contracts, paper or electronic, are adequately formed and enforceable.