Today’s digital age provides tremendous convenience for both businesses and customers. What can only be done manually in the past can now be accomplished using the internet, like sending documents online. As such, signing agreements and contracts electronically has also become standard practice across many industries.
Are electronic signatures binding? A digital signature’s legality is more complex than simply giving a plain yes-or-no answer. In this blog, let’s discuss the legality of digital signatures, requirements to make them legally binding, and other legal matters.
Understanding the Legal Framework for Digital Signatures
Online commerce began to gain tremendous traction in the United States during the late 1990s. This prompted the need for legally binding digital signatures for certain electronic records and documents. In 1999, the Uniform Electronic Transactions Act (UETA) was passed to establish a legal framework for eSignature use.
With UETA, US states can choose to adopt the law to make digital signatures valid in their jurisdiction. In 2021, Illinois became the 49th US state to adopt UETA. The state of New York, meanwhile, has enacted its own version of the law to make eSignatures enforceable.
Are Digital Signatures Legally Binding?
Digital signatures have been legally binding since the passage of UETA recognizing its legality. However, not all US states immediately adopted the legislative measure rendering a eSignature equal to its traditional, paper-based counterpart. As such, the US Congress enacted a landmark legislation that will make eSignatures’ legality as non-negotiable.
The law took form under the Electronic Signatures in Global and National Commerce Act, or ESIGN Act. With its adoption, the legality of digital signatures was solidified and set to resolve inconsistencies and disputes among US states. The federal law categorically declares that eSignatures bear the same legal weight as their ink-based equivalents.
Hence, no contract or agreement must be contested and legally questioned just because the signature was done electronically.
But to produce legal digital signatures, key requirements must be fully met for them to hold up in court.
Compliance Requirements for Digital Signatures
There are five compliance requirements that constitute a legally binding digital signature. These are:
Intent to sign. Both parties must demonstrate a clear intent to be bound by the legal document. To do this, signers can type or electronically draw their signature, or click on an “I agree/accept” button.
Signer consent. The ESIGN Act mandates that both parties must demonstrate agreement to do business electronically.
Signature attribution. The digital signature must be clearly shown that it is unique to the person who has signed the e-document.
Audit trail. In the event of a legal dispute, an eSignature platform must provide documentation for the transaction. This includes time stamps, the signer’s details, and the entire history of the authentication process.
Record retention. Records of the electronic transaction must be accessible for both parties for future reference.
Failure to comply with any of these guidelines will result in a contentious legal battle. It’s also likely that the court will favor the party questioning a digital contract’s legality if said requirements aren’t met.
Potential Risks with Digital Signatures
While many eSignature providers offer excellent safety features, there are still potential risks associated with digital signature use. Below are just some of them.
Fraud and forgery
While eSignatures have multiple security layers, they are not completely risk-free from fraud and forgery attempts. A software solution can be hacked and personal information can be compromised. This makes it critical that your electronic solution features a seamless authentication process that could deter data and identity theft.
Unauthorized signing
This is a major problem for both manual and electronic signatures. With the latter, running a strict authentication process could prevent unauthorized access from a potential hacker. To achieve this, a signer must present a valid ID matching what was provided during the account registration.
Other measures include having the signer receive a code via SMS and enter it before granted access. In addition, the signer must also receive an email confirming that he/she is indeed requesting for access.
Non-compliance
Compliance is a crucial consideration in making electronic signature use legally valid. A legal issue may arise if the eSigning takes place without using a trusted eSignature software. Hence, it is imperative that you use a HIPAA-, GLBA-, and GDPR-compliant platform when electronically signing documents.
Exclusions
While eSignature use is valid in all US states, digital signatures are discouraged in some documents. This includes testamentary trusts, wills, divorce and adoption papers, and court orders, among others. Thus, it is important to know whether digital signature use is permissible in your jurisdiction for the cases mentioned.
Using Fill To Digitally Sign Legally Binding Documents
The success of digital contract management processes all boils down to the use of a trusted and reliable software. In other words, choosing an integrated platform like Fill is crucial to produce binding contracts and agreements.
Using Fill will allow you to enjoy a varied selection of features to ensure 100 percent compliance with laws and regulations. With Fill, your documents are equipped with:
Foolproof authentication process
Fill is armed with a foolproof Signer ID Verification to prevent unauthorized access. With it, you can conduct ID verification checks to ensure client identification. This will allow you to verify whether the signers are who they say they are. In addition, you can detect forged signatures and fake IDs during this identity-proofing process.
256-bit end-to-end encryption
Security is absolutely essential when managing contracts regardless of their degree of importance. Fill is equipped with a military-grade security feature that can virtually deter potential safety breaches such as software hacking. Added security layers include an advanced facial recognition technology and a biometric-based identity authentication.
Free and customizable templates
Template use simplifies the process of creating forms and binding contracts. Using Fill lets you access and utilize a diverse selection of templates expertly designed for various businesses and industries. You can also customize a template to integrate your logo and create a unique branding for your company.
Real-time audit trail
One of the key features of Fill is its real-time audit trail for record-keeping and compliance with eSignature laws. Every electronic transaction conducted through the platform is recorded and securely stored in a centralized online repository. It will also record who and when the signing occurred, which can be used as admissible evidence in court.
Instant alerts and notifications
Team members handling manual paperwork have no way of tracking the progress of each document sent. With digital contracts using Fill, you can receive instant alerts about the status of your documents. Hence, you will be notified whether your contract is already received, annotated, or signed. Fill can also give you real-time updates for any contract changes made.
Digitize Your Contracts and Produce Binding eSignatures with Fill
The importance of ensuring compliance with eSignature laws could not be more emphasized. You can achieve this with Fill: a reliable paperless solution for your digital contracts and high-level documents. Businesses and individuals trust Fill for our full compliance with state and federal laws on eSignature use.
But that’s not the only factor. Our software is also relied upon for other vital features and for producing binding digital documents. This includes the ability to use Zapier to connect your other document-sharing apps with Fill. Likewise, you can seamlessly create contracts with our free and professionally-drafted templates.
Invest in a cost-effective digital platform to help you produce sales and win more clients. Use Fill and sign up for free today.
