When it comes to signing contracts and other legally binding documents, there are several factors that you need to consider. And as long as you follow these tips and don’t do anything questionable, you’ll find using electronic signatures is an incredibly convenient option.
What are Electronic Signatures?
An electronic signature, also known as an e-signature, is the term used to describe a variety of methods by which documents can be digitally signed and authenticated. Once considered a last-resort method, electronic signatures have become so common that they’re recognized by law in almost every jurisdiction.
In the U.S. the Federal ESIGN Act of 2000 classified e-signatures as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”
Across Europe, eIDAS Regulation classifies e-signatures as “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign.”
To use simpler terms, an electronic signature is a mark deployed by a signer to legally approve a document in a way that’s logically associated with both the signer and the document.
Electronic signatures provide a host of benefits (when compared to traditional wet signatures). This includes:
- Increased flexibility. Thanks to intuitive and user-friendly platforms like Box Sign, it’s easy for multiple parties to securely sign a single document without having to go through the painstaking process of mailing, printing, emailing, or faxing back and forth. This increased flexibility allows teams to work remotely and/or effortlessly manage contracts across state and national borders.
- Risk reduction. With an electronic signature, there’s a much lower risk of human error. Not only that, but it’s easier to implement methods by which you verify that the individual signing the document or contract is who they say they are.
- Improved UX. If you’re running a business that requires clients to sign documents or contracts, electronic signatures make it a much smoother process. This leads to a better user experience (UX).
- Go paperless. From an efficiency standpoint, electronic signatures can cut down on the amount of paper that comes through your office and allow you to reach your goal of becoming a completely paperless office.
It’s for these reasons that a host of individuals and professionals now solely rely on electronic signatures to process important documents and information. This includes real estate agents, salespeople, HR professionals, financial services professionals, healthcare professionals, and government officials.
The Legality and Enforceability of Electronic Signatures
Under ESIGN, eIDA, and most local government laws, electronic signatures are considered legally binding and enforceable. Having said that, there are several steps that must be taken before and during signing to ensure the signature is valid.
Though you’ll need to check with your local laws for specifics, the following requirements typically come into play:
- All signers must consent to using electronic signatures.
- All signers must be fully informed about what their signature means.
- All signers must be given other options (such as a wet signature and traditional paper).
- All signers must be informed that they can withdraw their consent to use electronic signatures at any time. (And they must be given a clear explanation of how that procedure is carried out.)
- The party that creates the contract must keep electronic and/or paper copies of all signed documents. They’re also required to provide the other party with a copy and/or let them know how to obtain a copy.
Contracts That Can’t Be Executed Electronically
While most contracts can be executed electronically, there are still certain agreements that must be signed using a wet signature on traditional paper. Under ESIGN (specifically), electronic signatures may not be used on:
- Wills and trusts
- Documents related to divorce, adoption, and family law matters
- Notices of repossession, eviction, or foreclosure
- Cancelation or termination of insurance and/or benefits
- Court orders and other court-related documents
- Notices of cancellation for utility services
- Product recall notices that affect someone’s health or safety
- Documents related to the transportation of hazardous materials
Putting it All Together
When it’s all said and done, electronic signatures are the safest, fastest, and most efficient way to sign legally binding contracts. And as long as they’re executed properly, electronic signatures are valid and enforceable.