Are Electronic Signatures Legal?

What are the benefits and legalities of Electronic signatures?

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Electronic signatures, or eSignatures are signatures which are supplied electronically rather than physically. They can be used for almost every business document, from contracts and onboarding forms to non-disclosure agreements and leases, boasting a number of benefits. But what exactly are the benefits of electronic signatures and are they really legally binding?

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Are Electronic Signatures Legally Binding?

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Before we delve into the reasons to use electronic signatures, we need to look at whether or not electronic signatures are legally binding.

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People often worry about the legality of eSignatures, as they’re a little different to what people are used to. One of the most frequent questions we receive about our app for e-signature is ‘are electronic signatures legally binding?

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It’s a genuine cause for concern.

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However, one of the main benefits of electronic signatures is that they are legally binding – in fact, they actually tend to be more enforceable than wet signatures because they can be traced right down to the date and time they were signed.

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Who knew?

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Although laws can vary in different countries, electronic signatures are generally well-received. In fact, in 2000, the ESIGN Act was passed in the United States, making eSignatures legal for pretty much any use.This has been echoed by a number of countries, including the eIDAS in Europe and the Electronic Communications Act 2000 in the UK (which was superseded by the eIDAS in2016).

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Another huge update in eSignatures was in the property sector. As of July 2020, HMLand Registry started accepting witnessed electronic signatures. This means that leases, mortgages and other property documents can now be signed electronically, drastically speeding up and taking some of the hassle out of property transactions.

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The eIDAS states that an electronic signature ‘shall not be denied legal effect and admissibility in legal proceeding solely on the ground that it is an electronic form’. Essentially, an electronic signature can’t be dismissed purely on the basis that it’s electronic, so unless it doesn’t meet other requirements it’s completely legally binding.

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But Couldn’t Anyone Sign my Name Online?

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One of the reasons why people question the legality of eSignatures is because of the worry that it’s difficult to prove exactly who signed a document. However, there are a number of ways to verify signer identity online, including:

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– One-time passcode sent to the phone number or email address associated with the account.

– Official ID verification using a passport or driving licence

– Logging in to an online account using a username and password

– Witnessed electronic signatures

So whether you’re signing a contract for a new job or buying a house – electronic signatures are completely legally binding and secure.

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They’re More Secure

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Security is one of the most important things when it comes to sensitive data and documents, so the last thing you want is for a signed contract or document to go missing.

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Thankfully, electronic signatures are much more secure than traditional, ‘wet’ signatures as they contain traceable information about who, when and where the document was signed – which is much easier to enforce than your traditional handwritten signature.

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Additionally, with the use of online file storage, the document can be encrypted, meaning there’s no risk of sensitive data falling into the wrong hands or being tampered with – protecting both you and your clients.

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They’re Convenient

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As well as being completely legally binding, one of the biggest benefits of electronic signatures is that they’re incredibly convenient.

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We live in a digital-first world, dealing with global customers and tackling fast turnaround times, so taking your document signing process online is a lot more convenient for everyone involved.

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Not only do electronic signatures speed up the document-signing process, but they also allow you to easily get signatures and approvals on one document without printing, scanning or posting a single bit of paper.

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They Can be Used Globally

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Whether you’re hiring internationally, dealing with global clients, or you have worldwide offices – electronic signatures can offer a huge helping hand.

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Let’s say you need a signature from your USA-based client within the next 24 hours, or you’re waiting for a signature from an international colleague - electronic signatures help to speed up the document signing process, meaning you’re not waiting around for contracts or documents to be posted backwards and forwards using international mail which has the potential to get lost.

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They’re Better for the Environment

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Although it might not directly impact your business, reducing your carbon footprint is an important issue to address as a business owner. It might surprise you to find out that over 10litres of water is needed to make a single piece of A4 paper and over 50%of business waste is paper, so why not cut down on your paper usage where you can?

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By using electronic signatures, you negate the need for printing, helping you move towards a paperless office environment and saving you space, time and money. What’s not to love?

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They Provide a Better Experience for Clients

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Any business owner will be looking to provide a positive experience for their clients in whatever way they can and luckily, electronic signatures is one of the easiest to implement.

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Gone are the days when documents needed to be sent via recorded delivery, signed and returned. By using an electronic signature app, you can simply upload a document, assign it to the relevant customer and await their electronic signature in just a matter of hours. Not only does this save you time, but it’s less hassle for your clients and customers too, meaning they’ve got more time to sing your praises. It’s a win-win.  

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They’re More Cost-Effective

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Now, if you want to run a successful business, then you need to make sure you’re being as cost-effective as possible to avoid any unnecessary losses.

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Electronic signatures are a great way to cut business costs as they’re far more cost effective than your traditional ‘wet’ signatures. Not only do you save on paper and printing, but there are also savings to be made when it comes to postage costs and supplies, as well as your precious time. Time is money, after all.

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Although envelopes and stamps may not seem like a huge business expense, these costs soon add up over the years, so it’s certainly worth considering.

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If you’ve been holding off on using our Electronic Signature App feature due to worries about the legalities, then you can rest assured your documents will be secure and legal. If you’re looking to reduce costs, provide your clients with a better experience and do your bit for the environment, then you should certainly be utilising the electronic signature feature.