Digitally Signed, Sealed & Delivered: Are eSignatures Legal?

published on E-signature technology, Legal Technology
Any member of the in-house counsel knows that trying to collect a signature on a contract often becomes a waiting game. It can take days or weeks to chase down the signer, costing businesses time, money and resulting in a frustrated general counsel or paralegal. Luckily for the legal world, there is a way to sign contracts without ever putting pen to paper. Effacts-Blog-Digitally-Signed-Sealed-Delivered-Are-eSignatures-Legal Esignatures or digital signature? Many people use the terms “eSignature” and “digital signature” interchangeably, but they actually refer to two different things. An eSignature is an electronic indication of a person’s intent to approve the contents of a document. In other words, there is no standard format for an eSignature because it could be a digital image of a handwritten signature or a random symbol. On the other hand, a digital signature is a type of eSignature, that refers to a specific technology that enables users to ensure the authenticity of the signer and to trust that a signature is valid through the use of a public and private key pair. Validity in The Netherlands Under Dutch law, contracts are valid if all legally competent parties reach an agreement verbally, electronically, or physically on paper. A specific Article 3:15 of Dutch Civil Code states that contracts cannot be denied simply because they are enforced electronically. In The Netherlands, an electronic signature must contain a certificate from a third party that is attached to the original document. In Europe, 30 countries (the European Union, plus Croatia, Liechtenstein and Turkey) have permitted the use of eSignatures for electronic contracts. As a member of the European Union, The Netherlands maintains a list that the public can access with a list of authorized electronic certificate providers. In more technical terms, The Netherlands is considered a 2-Tier eSignature Legal Model country, which means it supports the concept of a qualified electronic signature, where an electronic signature has special legal status because of specific technology requirements. The downside is that countries that have imposed this standard often struggle to promote the use of electronic business transactions especially across country borders. Validity in The United States The adoption of the Uniform Electronic Transactions Act (UETA) in most states and the passing of Electronic Signatures in Global and National Commerce Act (ESIGN) by the federal government paved the way for use of electronic records and signatures in commerce. Both acts state that electronic records and signatures are considered to be just as valid as traditional paper documents and handwritten signatures. In order to qualify as an electronic signature under the acts, the system that is used to execute the transaction must keep record that tracks the process by which the signature was created or must include a textual or graphic statement that is added to the signed record, reflecting that it was executed with an electronic signature. Effacts and Electronic Signatures Legisway has integrated DocuSign into the contract management process to create a 100% digital paperless workflow. Customers that have integrated DocuSign into their legal risk management software can collect signatures within a matter of minutes, saving time and increasing productivity. While there is still skepticism surrounding digital signatures, they are actually more secure because they contain detailed evidence that a person signed a document at a particular time. For instance, the signing process in DocuSign contains complete audit trail of who signed a document and when. In the event of a dispute over an electronically executed contract, the signature process must provide enough proof to confirm the transaction took place and include all the core elements required to defend an electronically-signed contract in court. DocuSign and Legisway have implemented a number of best practices to ensure the security and validity of electronic signatures:
  • Complete audit trail of all actions completed by the signer.
  • Encryption so documents can only be read and signed by intended users.
  • Unique signatures that can only be created and accessed by a particular user and stored securely online.
  • Transaction summary of complete document history.
  • Time-stamping of every step in the document process.