Before I say yay or nay, or somewhere in between because we’re talking about legal matters and opinions differ wildly, have a coffee and sit down for a good read. E-signature legality is something rather vast and comprehensive in many aspects, as you will see below, so get a good cup (preferably warm), sit down on a comfy chair and try to have a clear mind. Open mind as well, but it’s important we tackle this with a clear mind.
In a short and sweet way – the answer is YES! Electronic signatures are legal worldwide.
Longer answer – still yes, but with a lot of areas to gloss over. Of course, not everything is a simple yes or no.
Regardless of the geographical location where we consider the legality of the electronic signature, it’s important to consider that this is not a necessarily a new technology or something that came up as a result of the disruptive technologies that broke into the market in the past years. Electronic signatures are more than 20 years old when it comes to market acceptance and as a result, we have had some groundbreaking digital efficiency projects throughout the years that have drastically improved business processes. E-sign has immense potential and having this digital platform to sign your contracts, documents and other types of business / personal work.
And in the simplest terms, the advantage is plain to see – you can sign a legally enforceable contract in less than 30 seconds. And it’s valid worldwide!
Now let’s break this down by laws and geographical locations.
- European Union – EU EIDAS Regulation No. 910/2014
The EU has enacted a groundbreaking regulation called the EIDAS Regulation, Regulation No. 910/2014, active and in full force since July 2016, which regulates to almost every detail the usage, acceptance, types and trusted lists of electronic signatures. According to the regulation, three types of signatures are recognised throughout the Union and none of them can be rejected simply on the basis of being legal. Three types – Standard, Advanced and Qualified – are the core tenets of the European Regulation and are the ones that allow us to conduct business safely, securely and legally.
In other words – electronic is good!
Take an analogy to explain the current law – EIDAS is the GDPR of electronic signatures. It’s directly applicable, you cannot go against it and if you do go against it, you’re passable to receive some serious fines. E-sign in the EU can be used for any type of commercial contract, for some more delicate contracts (bank loans, insurance…) but not for notarised agreements or specialised documents such as wills. But beyond that, you can use it for anything you need.
To make it even clearer, here’s a simple definition of the three types available to you:
- Standard / Simple Electronic Signatures (SES) – think very basic signatures; your e-mail signature for example is a SES!
- Advanced Electronic Signature (AES) – uniquely identifying the person behind it, an AES is a SES with the identification of the signer
- Qualified Electronic Signature (QES) – the ones preferred by rigid internal structures, a QES is a AES with an added qualified certificate from the supplier, attesting the value and the rules that were followed, giving it the legal equivalent of handwritten signature
Should you use a QES for all documents in that case? No, you shouldn’t. You really should not.
In fact, 70-80% of the volume of e-sign in the EU is of a Standard / Simple type, in some ways going even closer to 90% overall. The reason for that is both economic and also procedural. Obtaining a QES can be 4-5 times more expensive and much more time consuming, creating a lack of business validity and business efficiency. You don’t need to pay 100 EUR (not the real price) a signature when your insurance packet is worth 5 EUR to pay for it. The disconnect between the value and the legal security is clearly highlighted here so do take that into account when you consider a future digitalisation package.
For the most part, the efforts of the European Union to standardise electronic signatures has been a successful endeavour, allowing all of the member states to take advantage of the digital single market and to ensure a clear operational way of digitalising both private and public services.
With regards to non-EU countries in geographical proximity to the EU (Balkans, Eastern Europe…), there has been significant effort to standardise national laws in order to conform them as close as possible to European Union EIDAS law. Efforts have been made in Serbia, Moldova and Ukraine to bring their own national laws as close as possible to EIDAS.
EIDAS Regulation – https://ec.europa.eu/digital-single-market/en/trust-services-and-eid
- United States – E-Sign ACT 2000
United States has been a pioneer in the field of electronic signatures – not really a surprise here, given that the e-sign industry has been pioneered in the United States. For the most part, United States has some of the most lax requirements for electronic signatures which greatly aids the widespread usage of e-sign throughout the entire business spectrum. Adding to that, DocuSign (www.docusign.com) and AdobeSign (www.adobesign.com) are the premier e-sign companies and they’re both American companies, a testament to the business model within the United States.
And a very favourable, open regulatory framework.
In the US, electronic signatures are governed by the E-Sign Act (Electronic Signatures in Global and National Commerce Act) of 2000, a federal law that is applicable in all of the states of the US. The precursor to that, called UETA, along with the E-Sign Act, deem that electronic documents or electronic signatures cannot be denied legal effect or enforceability simply because they are in electronic form.
Just do keep in mind that in the United States even a simple handshake is considered a valid agreement. And that clearly makes it much easier to use electronic signatures when it’s easier to agree on something!
Also – 30th of June has been declared the National E-Sign Day in the United States of America.
United States E-Sign Act – https://definitions.uslegal.com/e/e-sign-act/
- Asia – Japan
Japan has a very interesting procedural way for obtaining a type of signature. In fact, Japanese culture doesn’t really have a signature – what it does have instead is a type of personal seal called a hanko or inkan, which is the equivalent of the Western signature. With the advent of digitalisation we now have e-hankos, which allows Japanese citizens to use their own personal seal in an electronic manner and this effectively replaces the signature portion.
By all means, the e-hanko is a signature. And it is digitalised.
E-hankos are quite interesting also from a digital perspective as they are more of a seal rather than a personal signature, which means that they are also required for companies. Within Europe and USA there is a distinction between signatures and seals; often times seals include a lot more information due to them legally representing a company.
- Africa – Nigeria
According to the Nigerian Evidence Act, which puts forward the requirements for the validity and acceptance of a contract, a signature is not required for a valid contract. However, as it is in many other countries worldwide, enforceability of the said contract can only be done with a signature and the Nigerian law supports most types of electronic signatures.
Similarly, particularly in countries that have common law (Nigeria being one of them), it is important to consider that not all types of documents are allowed to be e-signed.
However, most commercial contracts are definitely accepted!
Whilst this is by no means a comprehensive e-sign legality guide, it’s a very good first step for all business owners & private individuals to go into the topic of electronic signature. And since this is fully legal throughout the world, there’s also plenty of providers of electronic signatures. From DocuSign (www.docusign.com) and Adobe Sign (www.adobe.com/sign) to ZohoSign (www.zohosign.com), HelloSign (www.hellosign.com) and Soda PDF (www.sodapdf.com), there’s plenty of options in the market to suit all requirements and budgets for digitalisation. Do a comprehensive search and choose the platform that suits you best.
Having an electronic signature platform is a strong measure of digitalising a company, driving it in the future digital market and ensuring that you keep up with your customers’ preferences and demands. It’s fully legal, so go ahead and become more efficient!
And save the planet by cutting less trees as well 🙂
Thanks for reading and all the best in your digitalisation journey!
P.S.: This article will be updated regularly, with more countries and with Latin America coming up next, so do check back for more info!