A Guide To Digital Signature Requirements
Businesses use electronic signatures for many applications. From customers filling out forms online to businesses completing contracts over the web, electronic signatures have become so commonplace that many businesses couldn’t readily perform their operations without them. That means following compliance requirements is essential.
E-signatures carry equal legitimacy as their wet counterparts. However, there are still several digital signature requirements that businesses must follow to ensure they carry their full legal weight. Here, you’ll learn about the requirements that must be met to make an electronic signature legal, specific to digital signature requirements in the U.S., European Union, and the U.K. So, whether you’re wondering if electronic signatures are legal or would like to know which legislation enforces them, read on for the answers.
What Are Digital Signature Requirements?
While electronic signatures are legal, the legal framework varies at the state and federal level.
Many laws have variations of the same fundamental requirements, but it’s important to understand the differences between each one. Otherwise, the contracts and agreements that businesses enter into with their customers may not hold.
Digital Signature Requirements in the U.S.
There are two main e-signature laws in the United States: the Electronic Signatures in Global and National Commerce (ESIGN) Act and the Uniform Electronic Transactions Act (UETA). ESIGN was drafted in 2000 and is the primary e-signature law for federal and interstate commerce, while UETA was drafted in 1999 to ensure greater uniformity across all legislation pertaining to e-signature legality. Both define what constitutes acceptable electronic signatures and what makes an electronic signature legally binding.
While not comprehensive, here are the primary digital signature requirements of the ESIGN Act:
- Intent to sign. As with handwritten signatures (or wet signatures), the signatory must have expressed clear logical intent to sign.
- Consent to do business electronically. The signatory must consent to signing the document through the electronic process.
- Opt-out clause and paper-based alternative. If the signatory prefers to sign a physical document instead of an electronic form, they should be able to do so, and there should be clear instructions on how to withdraw electronic consent.
- A signed copy. All parties must receive a copy of the signed electronic document — which a digital signature service may provide.
- Accessibility. The electronic form in question must accurately reflect the agreement and be able to be reproduced as needed.
Here are some main digital signature requirements for the UETA:
- The fact that a record or signature is in electronic form is insufficient grounds to deny its legal effect or enforceability.
- The fact that an electronic document was used in the formation of an electronic record is insufficient grounds to deny its legal effect or enforceability.
- Electronic records satisfy any law that requires that record to be in writing.
- Electronic signatures satisfy any law that requires a handwritten signature.
Although 49 out of 50 U.S. states and all territories have adopted the UETA, New York has its own framework for establishing electronic signature legality. The Electronic Signatures and Records (ESRA) Act provides its own definition for the legality of electronic signature requirements. It creates the role of “electronic facilitator” within the state’s Office of Information Technology Services (OITS) to streamline all electronic record procedures.
Digital Signature Requirements in the European Union
The E.U.’s legislation concerning digital signature requirements is the Electronic Identification and Trust Services (eIDAS) Act. This framework provides digital signature requirements by dividing them into three main categories:
- Standard Electronic Signatures (SES) meet the minimum requirements for electronic signature legality and are acceptable for sales contracts and other B2B, B2C, and C2C agreements.
- Advanced Electronic Signatures (AES) add security and identity verification requirements and are usually used for commercial leases, court briefs, and consumer credit loan agreements.
- Qualified Electronic Signatures (QES) are the most secure and require a Qualified Trust Service Provider (QTSP) to validate them. They are most often used for agreements with a federal agency and may entail the use of key cryptography and the creation of a digital certificate to store and track the signature.
Despite their broad use, some exceptions within ESIGN, UETA, ESRA, and eIDAS do exist. For example, one electronic signature clause states that e-signatures do not apply for certain agreements involving fiduciaries, testamentary trusts, and “do not resuscitate” orders.
Digital Signature Requirements in the U.K.
The United Kingdom agreed to the stipulations laid out in the eIDAS legislation while it was a part of the E.U. So, while it has its own electronic signatures act — the Electronic Communication Act (ECA) — the U.K. has retained the eIDAS legislation requirements as its foundational e-signature law.
Essential Requirements for Digital Signatures
Each e-signature law provides a framework for digital signature requirements and also gives more specific regulations for making electronic signatures legally binding:
Verify Signer’s Identity and Authenticity
The first step in meeting digital signature requirements is to ensure the signer’s identity and the authenticity of the signature. This can be done by selecting an “I accept” box or, for a more advanced method, utilizing multifactor identification (MFA). Further, an agreement must clearly prove that the signatory party is who they claim to be for an electronic signature to be legally binding.
Ensure Agreement From All Parties For Electronic Signature Usage
After proving the signatory’s identity, the next step is to ensure that all parties agree to use an electronic signature. Electronic signatures act as legally binding only if all parties consent. Otherwise, a wet signature option must be readily available.
All Electronic Records and Signatures Must Be Stored and Accessible
For an electronic signature to be legally binding, it must also be safely stored and accessible when required. This helps create an audit trail to prove compliance with a federal agency and can be done simply by offering the signatory the opportunity to download and print a physical copy of the electronic form they’ve signed.
Secure Digital Signature Technology Must Be Used
Security is essential for establishing electronic signature legality, and the means of security may vary according to the type of e-signature being stored. For example, a QES will generate a digital certificate to prove the electronic signature’s existence, and some digital signature services may use key cryptography to keep them safe.
How Our e-Signature Solution Can Help Collect Signatures Fast and Easy
Several regulations exist to ensure that electronic signatures are legally binding and enforceable. JSign can help you meet these digital signature requirements. Get started today to ensure your electronic forms’ legality.
