Are electronic signatures legally binding?

Where previously you could only use a wet signature to sign documents, most have been using the electronic or digital signature for quite some time now. And although e-signing saves a considerable amount of time and increases effectiveness, it also raises some questions. After all, to what extent is e-signing actually legally binding? Time to clear up the confusion once and for all!

First of all, it is good to know that the regulations concerning electronic signatures and their legal validity can differ by continent, country and even state. For example, in Europe, the electronic signature is regulated by the European eIDAS regulation (2014), and in the United States, the ESIGN ACT and UETA are in effect. 

Legality in Europa

The use of the electronic signature is regulated in Europe by the eIDAS. The eIDAS contains all kinds of agreements made with all European member states, ‘concerning electronic identification and trust services for electronic transactions in the internal market’, according to the eIDAS regulation. Among other things, the regulation ensures that all EU countries recognize each other’s electronic signatures as valid and it makes doing business across borders a lot more efficient and secure. In addition 

Trustworthiness is important

To know whether an electronic signature is legally valid, we look at the trustworthiness of the signature. The eIDAS distinguishes between three different electronic signatures; the simple electronic signature (SES), advanced electronic signature (AES) and qualified electronic signature (QES). In principle, all three electronic signatures are legally valid, but they each have their own level of trustworthiness. Once a conflict arises over the signed document and it gets so far that a judge is involved, he will always look for the trustworthiness of the method of authentication. 

With the simple electronic signature, the trustworthiness level is very low; it is not easy to prove that the signer was also the person who had to sign and the content of the document can be changed afterwards. As a result, there is little chance that it will hold up as evidence in a courtroom.

For very important documents it is therefore advisable to use the advanced electronic signature or, even better, the qualified electronic signature. These signatures are also called “digital signatures” and have a higher level of reliability because they have to meet more requirements. Thus, the advanced electronic signature is often in combination with a unique code that is linked to the document and / or two-step verification, so that the signer can be identified. 

The qualified electronic signature goes one step further. It is created with a qualified means and qualified certificate (PKI certificate). This certificate is personal so this type of electronic signature has the highest reliability level. With the qualified electronic signature you can be sure that it has sufficient evidential value. Compliance with the agreements made can be enforced. 

Legality in The United States

In the United States, different rules apply regarding electronic signatures. Agreements concerning the electronic signatures are regulated in the UETA and the ESIGN Act. The UETA is a law that gives legal validity to electronic contracts and signatures. The UETA has the same goal as the eIDAS; to remove obstacles to electronic commerce by validating electronic signatures.

Shortly after UETA was introduced, another law came along; the ESIGN Act. The ESIGN Act actually regulates the same thing as the UETA. However, the main difference between the two laws is that the ESIGN Act is a federal law, while the UETA is a state-by-state law. This means that each state within the United States may decide for itself whether to adopt or repeal the UETA regulations. The ESIGN Act then exists to subsequently resolve conflicts between state-based electronic signature laws. 

Both the UETA and the ESIGN Act provide a legal basis and framework for electronic signatures. This framework includes the following requirements to ensure the legitimacy of electronic signatures: 

1. Intent to sign: each signer must declare his intention; 

2. Consent: all involved third parties must provide consent to do business electronically;

3. Verification: an audit trail should clearly show the history of the signing process; 

4. Record Retention: documents must be able to be reproduced and all signatories must receive copies of and have access to the document.

Electronic signatures that comply with the rules of the UETA and/or the ESIGN Act are legally valid and enforceable. They are given the same legal status as handwritten signatures under state law. However, electronic signatures combined with sealing, strong authentication, security and an audit trail have a more weighty evidentiary value than a scanned image of a document with a signature.  

To summarize

In principle, we can say that the electronic signature is legally valid and legally enforceable in many cases. However, if you want to be sure, then in Europe you can best use the qualified electronic signature. This has the highest level of reliability concerning authentication. In the United States, electronic signatures are also valid, provided they meet the requirements of the UETA and ESIGN Act. 

Although e-signing is valid in many cases, caution is advised when signing important documents (read: wills, court orders or other official legal documents). For these types of documents, we recommend consulting the laws, or a lawyer if necessary. 

Do you want to use eSigning software to sign documents and contracts? Check carefully whether the signatures offered by the software comply with the eIDAS, UETA or the ESIGN Act. 

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