Are Electronic Signatures Legal?
Electronic signatures can make document management processes more efficient and secure. However, just how legal are electronic signatures? While we are not legal professionals ourselves, we’ve written this article as a guide for understanding the legality of electronic signatures and where and when it is appropriate to use them. We’ve also recommended certain solutions based on their legal compliances and security features.
Table of Contents
- What Qualifies as an Electronic Signature?
- Which Documents Cannot be E-signed?
- Electronic Signature Laws in the U.S.
- Electronic Signature Laws by State
- Electronic Signature Software
- Our Top Three Electronic Signature Solutions for Legal & Security
What Qualifies as an Electronic Signature?
According to the E-Sign Act, an “electronic signature” is a sound, symbol, or process attached to a contract or other record that is executed by a person with the intent of signing said record. Most of the time, an electronic signature is a digitized version of a physical signature.
Which Documents Cannot be E-signed?
There are only a limited number of documents that cannot be electronically signed. These include:
- Adoption papers
- Divorce papers
- Court Orders
- Notices of Termination (leases, utility, etc.)
- Notice of Repossessions
- Notice of Foreclosure
- Notice of Eviction
- Product Recall Notices
Electronic Signature Laws in the U.S.
In order for an electronic signature to be legally binding, depending on how they are used, must be compliant under a few electronic signature laws. The primary laws we discuss below are the E-Sign Act, UETA, and HIPAA.
|E-Sign Act||This is a federal law that grants legal recognition of electronic signatures and electronic records as long as all parties intend to use them.|
|UETA||The Uniform Electronic Transactions Act enforces that electronic documents and signatures related to business, commercial, and governmental matters suffice for legal purposes as long as the parties involved agree to proceed electronically. This law is only accepted on a case-by-case basis.|
|HIPAA||The Health Insurance Portability and Accountability Act is a federal law that required the creation of national standards to protect patient health information from being disclosed without a patient’s consent or knowledge.|
Electronic Signature Laws by State
Most of the United States is compliant with the E-Sign Act and UETA when it comes to the legality of electronic signatures. However, New York and Illinois do not adopt the UETA and have state laws of their own.
New York enforces the ESRA, the Electronic Signatures and Records Act. This act provides that electronic signatures will be the same amount of legally binding as hand-written signatures. It also enforces the legality of documents created and retained in electronic form.
Illinois enforces the ECSA, the Electronic Commerce Security Act. It is modeled on the E-Sign Act and specifies that information, signatures, and records cannot be denied legal effect, validity or enforceability solely on the basis that they are in electronic form.
Electronic Signature Software
There are extra legal and security measures an electronic signature solution can uphold. These measures help protect a user and their recipients’ documents and information.
|Secure Document Storage||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Two Factor Authentication||Yes||Yes||Yes||Yes||Yes||No||No||No||Yes|
|International Law Compliant||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Audit Reports Feature||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
The table below lists out the specific document storage security and international law compliances each solution adheres to.
|Solution||Secure Document Storage||International Law Compliant|
Our Top Three Electronic Signature Solutions for Legal & Security
Our top three solutions that we recommend for security and legal compliances are DocuSign, PandaDoc, and Formstack Sign. All of these solutions offer HIPAA compliance and two factor authentication, as well as some of the highest levels of security and international law compliances.
When it came to ranking these solutions, we looked at the amount of certifications, international law compliances, and platform security settings each solution obtained and offered.
Out of the other solutions, DocuSign offers the most security certifications and complies with a wider range of international e-signature standards. Some of these compliances include PCI DSS, CSA STAR Program, and APEC PRP. DocuSign also offers more security platform settings that a user can customize. Some of these settings include:
- Web app session timeouts
- Recipient authentication settings
- Access codes for documents
- Password rules for other members of the account
DocuSign is the most popular electronic signature tool used by over 500,000 customers to automate their document agreement processes. It is the most robust software solution in the market, but remains very easy to use. Overall, it is an ideal solution for companies of all sizes that should definitely be on your short list.
PandaDoc offers many high-grade security and legal compliances. This includes PCI DSS and FERPA, or the Family Educational Rights and Privacy Act. They also offer a few account security settings including workspace and member permissions, but these are limited to Enterprise users.
PandaDoc is an electronic signature tool used by over 20,000 companies. While PandaDoc can be used for any type of legal agreement, it does have a specific focus on supporting the deal process for sales professionals. This solution is best for sales professionals, and any organization that has a more complex document workflow.
3. Formstack Sign
Formstack Sign offers a good range of legal and security compliances. One of these compliances include PCI DSS. Its platform also includes a few platform security features found in only a few other solutions. This includes advanced password settings, session timeouts, and role permissions settings.
Formstack Sign is a basic electronic signature tool used by over 10,000 businesses for faster, more versatile document signing. It includes key features like flexible signing, audit reports and templates. It’s best for smaller companies, and should be evaluated next to Docsketch and DocuSign.
Electronic signatures became legal on June 30, 2000.
An electronic signature is an electronic symbol used by a person who intends to sign a contract or other record with it. A digital signature is actually a process that verifies the authenticity of an electronic document and whether its contents have been altered in transit.
No. An electronic signature needs to comply with certain laws such as the E-Sign Act and UETA to be legally binding. Just typing a name on a document or form would be difficult to uphold in court. This is because a “typed name” has to be proven to belong to the person it represents and it has to be tied to the document, so that if any changes are made, they are spotted.