Back in the olden days, the gentleman’s agreement was very much a thing – everything from business deals to buying a house was agreed with little more than a few words and a handshake – but all that changed in the 17th Century. By 1677, the British Parliament had decreed that certain deals and contracts would not be considered valid unless accompanied by a written name – and thus, for centuries, the signature by hand became the accepted way of sealing a deal.
Esign on the dotted line
Fast forward to 1976 and, a couple of clever chaps named Whitfield Diffie and Martin Hellman came up with the concept of a digital signature. This meant that two or more signatories would no longer need to have physical access to the same document in order to confirm their acceptance. These days, the use of digital signatures is commonplace and, in fact, most of us use these on each and every email that we send – but are they legally binding? Yes and no.
“An e signature is generally considered to be legally binding on a document and can even be used as evidence in a court of law” – says Lewis Banks, one of senior managers at LegalDrop.com. However, in order to be legal, the signature needs to pass three very important tests:
- Identity – In order to be viable, the identity of the signatory must be verifiable – this means that identity must be verified by either SMS, email or electronic ID.
- Purpose – This speaks to the content of the contract or document and determines the purpose of the document and, whether or not all parties have legally committed to that purpose.
- Integrity – In order to be legally binding, there must be sufficient proof that the document has not been altered or tampered with after signature.
Says who?
In the European Union, an organisation known as eIDAS (Electronic Identification and Trust Services Regulation) keeps a beady eye on standards and best practices for e signatures and, ESIGN performs the same operation in the United States.
Why e sign ?
Digital signatures have a number of benefits and, the most important of these is that they save time and money. While, in the past, a person would have to travel to a business or solicitor’s office to sign a document, or do so by post, they are now able to sign in a matter of seconds. For businesses, this translates into some significant cost savings. Another benefit is that there’s a data trail for signatories.
What are the drawbacks?
While most digital signature platforms are on the level, there are some which are not. If you choose to use a signing platform, you need to check that it’s onboard with GDPR laws to avoid getting into legal hot water – for example, the leading platform, DocuSign, is covered by GDPR ISO 27001, meaning that it’s safe to use.
Another drawback is security – these days, hackers and cybercriminals are more sophisticated than ever; which means that identity fraud is a potential risk when using digital signatures on a regular basis.
One slightly grey area is that of forwarding emails – if you forward an email which contains somebody else’s digital signature, you may get into legal trouble if that person subsequently becomes a victim of identity theft. Because of this, it’s a good idea to remove signatures from emails before forwarding.
The write stuff
To conclude, digital signatures are absolutely legally binding, as long as they pass the tests of viability and integrity – and as long as you use some common sense in terms of security by limiting the number of people who have access to your digital signature.