Digital Documents And Signatures: Are They Legally Recognized?

For those in the business world, receiving a digital document and signing it electronically is the new norm.

As a core element of digital transformation, digital documents and signatures are quickly becoming a key component of most business transactions. Digital documents and eSignatures give businesses of all sizes, shapes, and locations the potential to expand their reach, streamline their processes, and form relationships with other businesses across the world.

But as more businesses use this technology, you might start to wonder if they’re actually legally recognized and binding.

This article discusses the validity and legality of digital documents and eSignatures and the core elements that make them, well, legitimate.

The Laws Regarding Electronic Signature

In 2000, the US Electronic Signatures in Global and National Commerce Act or ESIGN was created. This legislation accepts electronic signatures having the same legal weight as the traditional, paper-based ones. It ensures that eSignatures are legally binding and accepted in every state where the federal law applies.

In states where the federal law doesn’t apply, the Uniform Electronic Transactions ACT or UETA was adopted. It was developed by the Uniform Law Commission and acts as a legal guide for the use of electronic documents and signatures to help ensure that they’re just enforceable as their paper counterparts.

Meanwhile, some states such as New York and Illinois have their own laws and regulations to ensure that digital documents and eSignatures have the same legality and validity as paper-based records and hand-written signatures.

So, to answer the question:

‘Are digital documents and signatures legally recognized?’

Yes, it’s legally recognized and binding to sign documents online. Regardless of where you conduct your business, digital documents and eSignatures offer an efficient, easy, legally binding method for documenting acceptances, confirmations, and more.

However, there’s a catch— there are several elements that should be fulfilled in order to ensure that transactions with digital documents and eSignature are accepted legally.

Elements Of A Legal Digital Document And Electronic Signature

Although electronic documents and signatures are easy to collect, for these to be recognized as valid under the laws and regulations, there are several elements and factors you need to consider.

Legitimate Intent To Sign

In a traditional ink signature, the person should sign a document purposely and deliberately in order to be valid. The same holds true in electronic documents and signatures.

In terms of digital documents, the signer is often required to type their name and click a clearly labeled ‘Accept’ button in order to show intent to sign. Whether you use a mouse and cursor or rely on a touchpad and stylus or fingertip to mimic the movements of signing with a pen, the key here is to make it very clear that there’s intent to sign.

Consent To Do Business Online

Other than making it clear that an eSignature was intentionally submitted, you also need to get proof of consent from all parties to do business online.

For instance, most businesses include a consent clause in their online form and require signers to click the “Accept” button before they can officially sign and submit a signature.

Recordkeeping Is A Must

After a digital document and signature have been captured, a business needs to have procedures in place for storing and retaining them for a certain period prescribed by any applicable rules and regulations.

You should also make sure to provide a fully executed copy of the electronically signed documents to the signer as soon as it’s ready. Also, make sure that the signed document is sent and stored automatically to a secure database that you can pull out from when needed.

Ensure Security Measures

There’s just one more element to consider and is probably the most important one— ensuring the proper security measures when collecting and storing digitally signed documents.

It’s important to have the same security measures you use to protect other business documentation and data. Just like with credit card payments, you don’t want to risk exposing electronically signed documents falling into the wrong hands. This is particularly important if you’re using automation tools and online forms to generate proposals, contracts, and other digital documents.

So, if you’re looking for software to capture eSignatures, make sure that it uses encryption technology with full Advanced Encryption Standard AES 256-bit Secure Sockets Layer (SSL) security. Used in banking transactions, such technology can help ensure your documentation, data, and eSignatures are shared and stored securely.

Conclusion

And there you have it! As you can see, digital documents and eSignatures are generally legal and valid. As long as your business and the software you use have the above elements and adhere to all relevant laws, you don’t have to worry about your electronic documents not having legal powers.