What Are the Legal Requirements for eSignatures?

eSignatures have quickly become an indispensable tool for industries ranging from real estate to healthcare to. But while eSignatures offer numerous benefits, are they legal?

The short answer is yes. The long answer is what we will share with you today. There are two parts to it. One, legal frameworks individual to countries that allow for e-singatures to be legitimized, and two, e signature softwares that must be compliant with these frameworks. This combination comes together to ensure secure and legal electronic signature ecosystems.

What Is a Legal Electronic Signature?

A legal electronic signature is a digital equivalent of a handwritten signature. It is a method of signing documents electronically, demonstrating the signer’s intent to agree to or approve the contents of a document. Unlike traditional signatures, eSignatures often rely on secure technology to verify the authenticity of the signer and maintain the integrity of the signed document.

The legality of eSignatures depends on specific regulations and standards that vary by country. However, most jurisdictions recognize e-Signatures as legally binding, provided they meet certain criteria. Let’s get into these criteria and find out if your region is covered

Key Legal Frameworks for e-Signatures

The legal acceptance of eSignatures is underpinned by legislation in many parts of the world. Below are some of the primary frameworks that govern their use:

1. Electronic Signatures in Global and National Commerce Act (ESIGN Act) – United States

Enacted in 2000, the ESIGN Act grants eSignatures the same legal validity as handwritten signatures. To comply with the ESIGN Act, businesses must ensure that:

• The signer’s intent to sign electronically is clear.
• The process used for signing is secure and reliable.
• The signer consents to using electronic signatures.
• The signed document can be accurately reproduced and retained.

2. eIDAS Regulation – European Union

The Electronic Identification, Authentication, and Trust Services (eIDAS) Regulation establishes a standardized framework for eSignatures across EU member states. Under eIDAS, there are three levels of electronic signatures:

• Simple Electronic Signature (SES): Basic level without strong identity verification.
• Advanced Electronic Signature (AES): Requires unique identification and security features, such as certificates.
• Qualified Electronic Signature (QES): The highest level of security, equivalent to a handwritten signature, and backed by a qualified trust service provider.

3. Information Technology Act, 2000 (IT Act) – India

In India, electronic and certificate-based digital signatures are regulated by the Information Technology Act, 2000 (IT Act) and associated rules. Both types of signatures have the same legal status as handwritten signatures. Digital signatures are commonly used for government transactions like e-filing and GST filings. To be legally valid, an electronic signature must follow specific authentication techniques, such as Aadhaar-based e-KYC or PAN-based services. While reliable digital signatures are presumed valid under the IT Act, agreements with non-recognized signatures are not automatically invalid.

To ensure an electronic signature is considered reliable and legally binding under the IT Act, it must meet several criteria:

• it must be unique to the signatory
• the signatory must have control over the data at the time of signing, any changes to the signature or the document must be detectable
• there must be an audit trail documenting the signing process.
• digital signatures must be certified by a Certifying Authority (CA) recognized by the Controller of Certifying Authorities. A list of licensed CAs can be found on the official website of the Controller of Certifying Authorities.

4. Other Jurisdictions

Countries like Canada (via the Personal Information Protection and Electronic Documents Act) and Australia (under the Electronic Transactions Act) have similar laws validating eSignatures. Before you start using e-signatures it is best to understand regional laws.

Requirements for Ensuring e-Sign Legality

To ensure compliance with legal electronic signature standards, choose an e-signature software that is already compliant with these frameworks.

1. Clear Intent to Sign A legal electronic signature must reflect the signer’s intention to agree to the document’s terms. E-signature platforms will add an explicit consent mechanism, like clicking a “Sign” button or checking a box to allow the user to indicate agreement.
2. Authentication and Identification Robust authentication processes are critical for ensuring the signer’s identity. Common methods offered by e-sign softwares are:
   • Email verification
   • Unique codes or passwords
   • Biometric authentication (e.g., fingerprint or facial recognition)
   • Document Integrity The document must be tamper-proof after signing. Technologies like digital certificates and cryptographic hashing ensure that any post-signing alterations are detectable.
   • Consent to Use eSignatures Laws like the ESIGN Act require signers to give explicit consent to conduct transactions electronically. This often involves a pre-signing disclosure explaining the process and confirming the signer’s agreement to use an eSignature.
   • Retention and Accessibility Signed documents must be stored securely and remain accessible for future reference. Many eSign platforms provide encrypted storage and audit trails to ensure compliance with record-keeping requirements.

Best Practices for Implementing e-Signatures

Before you integrate e-signatures into your workflow, read up on these best practices:

1. Choose a Reputable eSign Solution Opt for platforms that adhere to recognized standards. Leading providers like FlexiSign, often offer features such as advanced authentication, audit trails, and tamper-proof document storage.
2. Train Your Team Educate your employees about the legal requirements for using eSignatures.
3. Implement Security Measures Protect your eSignature workflows with encryption, multi-factor authentication, and secure access controls to safeguard sensitive information.
4. Stay Updated on Legal Changes eSignature laws can evolve. Regularly review relevant legislation to ensure your processes remain compliant.

Common Misconceptions About e-Signatures

Despite their widespread use, some misconceptions about eSignatures persist. Let’s address a few them today:

• Are eSignatures always valid? While most jurisdictions accept eSignatures, they must meet legal requirements to be enforceable. Invalid processes can render an eSignature non-binding.
• Are eSignatures less secure than handwritten signatures? On the contrary, eSignatures often incorporate advanced security features, making them more secure than traditional signatures in many cases.
• Do eSignatures work for all document types? Some documents, such as wills or property deeds, may require additional formalities or handwritten signatures, depending on jurisdiction.

Know the Law & Choose the Right e-Signature Software

Understanding the legal requirements for eSignatures helps you choose the right e-signature software and leverage this powerful technology. By ensuring compliance with industry standards and adhering to regulations, you can confidently integrate eSignatures into your operations.