Are electronic signatures legally binding?

Are electronic signatures legally binding?

Electronic signatures eliminate the need to complete legal documents and contracts in person, improve efficiency and reduce paper waste. But people are still wondering if electronic signatures are legally binding.

As the COVID-19 pandemic has forced many nations into a complete blockade, corporate adoption of electronic signature software has increased. Government organizations and services have had to limit face-to-face interactions, which has forced companies dealing with paper contracts and documents to resort to digital alternatives such as electronic signatures. None of this would be possible if electronic signatures were not legally binding.

Validity criteria

In 2000, the US federal government passed the Electronic Signatures in Global and National Commerce Act. The ESIGN Act confirmed that legally binding documents can use electronic signatures if all parties choose to digitally sign. This ruling applies in the United States

For an electronic signature to be considered legal or rejected in court, the signature must have the following:

  • a digital seal able to trace its origins;
  • an audit trail leading back to the original signatory; And
  • strong authentication methods to confirm the identities of signers.

People find electronic signatures in their daily life when they accept terms and conditions on apps, e-commerce websites, and computer software. Electronic signatures also appear in digital forms on web pages, PDFs, and other intake forms that require users to sign their names. Many people also associate vendors such as DocuSign or Adobe Sign with electronic signatures, as they have witnessed the transmission of documents that require electronic signatures.

Concerns about electronic signatures have also raised some alarms for professionals because signing like someone else in the digital world is easy with the right tools. Therefore, organizations should take precautions to avoid fraud. Some of the steps taken include the following:

  • Use only approved electronic signature tools or portals.
  • Make sure users enable two-factor authentication.
  • Trust only the signed documents you expect to receive.

Electronic signatures continue to support the digitization of documents that some companies still struggle to manage. While not all organizations are rushing to implement electronic signatures in business operations, this change brings various benefits.

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