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Are electronic signatures legal? Everything you need to know

Topics
What is an eSignature?
Are eSignatures and digital signatures different?
Are eSignatures legally binding?
What is the benefit of using an eSignature?
Choosing the right eSign tool for your business
Final thoughts

Electronic signatures are the fastest, most reliable and collaborative way to gather signatures for documents.

Rather than waiting for a signature on the physical copy of a document, with an eSign tool not only can you close deals faster, but there’s a clear audit trail. That means productivity goes up, as does transparency.

The reality is, electronic signatures are becoming increasingly popular as more people adopt digital working practices and switch to remote work.

There’s sometimes a wariness, however, that eSignatures aren’t legally binding. The misconception being that, in the eyes of the law, if something is signed electronically versus by hand it’s somehow not as valid.

Laws dictate and protect the use of eSignatures in the United States, as well as countries around the world. Are electronic signatures legal? The short answer is, “yes”. In more than 180 countries, signing something electronically is valid and laws are highly permissive.

In cases where there are legal exceptions, it’s not that these types of signatures aren’t usable, it’s that there may be additional legal requirements for enforceability.

Below we’ve broken down specific details about the implications of that legality and how to choose an appropriate tool to facilitate eSignatures for your business.


What is an eSignature?

An eSignature allows you to get approval or consent on online contracts and agreements. Using an e-signature means there’s no need to get a physical signature, speeding up the contract signing process.

  • An eSignature is simple and just like signing a hard copy document

  • The legality of an e-signature is the same as a paper equivalent in most countries (but you should always check the latest legislation where you live and where your other signatories live)

  • An eSignature can be as basic as adding a name to a digital copy

  • eSignatures are increasingly popular and the market is projected to grow significantly in the coming years

  • “eSignature” is a broad term for different types of electronic signatures, including digital signatures, which serve different purposes


Are eSignatures and digital signatures different?

The terms eSignature and digital signature are commonly used interchangeably. Even though they serve similar purposes, there are distinct differences between them. A digital signature is a specialized subset of electronic signatures.

  • Digital signatures are an advanced type of electronic signature, which goes further to verify and authenticate the person signing the document and the document’s integrity

  • Primarily, digital signatures have advanced features for security and compliance

  • Digital signatures have enhanced audit trail features and backend tools to ensure authenticity

  • A digital signature uses an algorithm to create a digital fingerprint or a private key unique to each document.

  • Public key infrastructures (PKI) are used with digital signatures, which are a set of policies and procedures and are needed to create and issue digital certifications

  • A PKI establishes the identity of the individuals using them

  • The benefits of PKI include controlled access to systems and resources, improved accountability and data protection

While across the board, all types of electronic signatures have benefits, not all esign software offers the same features

For example, Pipedrive’s Smart Docs tool allows you to gather digital signatures, specifically designed for the needs of the sales industry, with public key infrastructure (PKI) and certification for added security. Thanks to Smart Docs’ centralized documentation process and cloud storage capabilities, users can close deals faster, ideal if you need to work on the move.


Are eSignatures legally binding?

eSignatures are legally binding in most of the world. In the United States and Europe, the use of electronic signatures is based on specific laws. In other places, like Mexico, there isn’t one unified piece of legislation, but there’s legal recognition.

United States

In the United States, electronic signatures are legal under the Electronic Signatures in Global and National Commerce Act, or ESIGN. Also applicable are the state and territory versions of the Uniform Electronic Transactions Act (UETA).

Under ESIGN, signatures and electronic records are covered when they relate to a transaction. A transaction under ESIGN is a set of actions associated with conducting business, commercial or consumer affairs.

An electronic signature is considered any process, sound, or symbol associated with a record and used to sign. According to U.S. law, an e-signature can’t be denied legal effectiveness or enforceability solely because it’s in electronic form.

Canada

According to Canadian law, an electronic signature can be letters, numbers, characters, or other symbols associated with an electronic document. A secure electronic signature under Canadian law is unique to the person signing and the process or technology used is solely under the control of the signatory.

An eSignature has the same status legally in Canada as one written by hand. To ensure a uniform approach, Canada enacted the Uniform Electronic Commerce Act.

However, Quebec has a different but comparable law indicating electronic documents and signatures have the same weight legally as hard copies.

United Kingdom

The use of electronic signing options has been legal in the UK since 2000 due to the Electronic Communications Act of 2000.

In 2016, the United Kingdom adopted the European Union’s Electronic Identification and Trust Services for Electronic Transactions Regulations guidelines. Meanwhile, the Electronic Identification and Trust Services for Electronic Transactions (EU Exit) regulations have been in place since 2019.

Essentially, there are consistent laws and guidelines enforced across the UK that broadly allow for the use of electronic signatures and records.

European Union

In most countries in the European Union, including Germany, eSignatures have been legally recognized since the early 2000s. The passing of the eIDAS law in 2016 standardized the acceptance and process of e-signatures across Europe.

These types of signatures are permitted for use in business and are court-admissible.

Under European Union law, there’s no need for a document or contract to have a handwritten signature to be credible. All companies in the EU must follow the standard eSignature regulations.

Brazil

Medida Provisoria 2.200-2 gives businesses the ability to use eSignatures in Brazil. The law has been in place since 2001 and, again, not only are these eSignatures used in business, but they’re court-admissible.

There’s no need for a handwritten signature in Brazil to show validity and electronic software solutions can be used in support of contracts and the provision of records when needed as court evidence.

Mexico

Unlike the locations above, Mexico doesn’t have one specific law guiding records with electronic signatures. So, are electronic signatures legal in Mexico?

Yes and they are increasingly being used. Two laws usually apply: The Federal Civil Code and The Federal Commerce Code.

Electronic signatures, generally, are as enforceable as a handwritten signature. As is the case in most places worldwide, these signatures are legally seen as the same as a handwritten equivalent and are admissible trial evidence.


What is the benefit of using an eSignature?

Along with the peace of mind of knowing eSign documents are generally legally binding and enforceable, below is a list of benefits of integrating an eSign process into your business.

  • eSignatures are generally legally enforceable. There are a few exceptions where having someone electronically sign a document for sales or business wouldn’t be enforceable.

  • Eliminate idle periods. Rather than relying on the exchange of hard copy documents for a handwritten signature, using a tool lets you efficiently and conveniently close deals and get what’s needed.

  • Convenience and simplicity mean the difference between closing or losing a deal. Offering eSign options simplifies things for clients. Clients can sign documents from anywhere at any time.

  • Eliminate hold-ups and bottlenecks. Anything that makes closing faster is a win – one of the critical benefits of eSignatures. If someone is holding up the process or something is creating a bottleneck (like waiting for a contract to be delivered by mail, or for printer access), you are better able to identify it quickly and fix the issue.

  • Save money with a paperless workflow. Cut down on the cost of printing and paper and the general expenses of a lengthy process.

  • Advanced security controls protect data and documents. Security is a big priority for every business. eSign tools include an audit trail, which could be vital in the case of a dispute or issue arises.

  • Get centralized visibility of contracts. Sales professionals may end up going through multiple channels to check the status of a contract. When using eSignatures, an audit trail is created involving each participant. If you’re using Smart Docs, you can also store the signed contract in the relevant Pipedrive deal for added visibility.

  • Reduce environmental impact. Companies need to reflect the values of their customers and going paperless as much as possible is an excellent way to demonstrate environmentally-friendly values and goals.

  • Increase collaboration. Gather what’s needed from relevant parties, keeping deals moving along and sharing information internally as necessary.


Choosing the right eSign tool for your business

With benefits including legal enforceability, convenience and cost-effectiveness, how can sales teams choose the best tool for their business to obtain signatures electronically?

There are a few general considerations to keep in mind when choosing an eSign tool. The first is business needs.

For example, how many users will need access to eSign documents? What about departmental access? Will you require cloud storage or PDF options? With Pipedrive’s Smart Docs, there’s scalability thanks to a solution that meets your sales team’s current needs but is ready for where they’re going.

Smooth implementation and a user-friendly interface are also considerations to keep in mind. The tools you choose should easily integrate with your existing systems and onboarding should be easy enough that your team is up and running quickly.

Other features to consider include:

  • Can you autofill documents? Pipedrive’s Smart Docs users can auto-fill documents. Users can create templates to pull product details and information from their catalog automatically or from a custom Pipedrive field. The feature results in faster quote delivery and fewer errors thanks to less manual detail entry.

  • Will you get a notification when a client opens a document? Smart Docs features tracking tools. As a sales professional, identifying the right time to follow up and ultimately close a deal is an important skill – Smart Docs tracking features can help. You can also send reminders as needed.

  • What are the collaborative features? It should be easy and efficient to provide an entire team with instant access to templates and documents. With Smart Docs, collect up to ten signatures on a single document.

  • How user-friendly will it be for your clients? You’re already removing the physical limitations of a handwritten signature, but if your client has to download a plugin or a file it can represent a hurdle. When selecting a tool to gather signatures, there should be as few steps as possible.

  • Does it integrate with your existing systems and tools? Look for a solution like Smart Docs with Google Drive one-click integration or, if more relevant, Microsoft OneDrive integration.

  • Can you share PDFs? Users should be able to share a PDF document with a trackable link when needed.

  • Is storage automated? Smart Docs has automatic storage, along with an audit trail that goes to all involved participants.

  • Is the eSignature tool secure? Smart Docs includes decryption and encryption technology. The tool also uses verification with identifiable data, including IP addresses. Once the necessary signatures are collected, the document is encrypted with Private Key Infrastructure and certification and a timestamp is added.


Final thoughts

Using electronic or digital signatures is broadly legal and as enforceable as handwritten signatures in a court of law. This is true in many countries, which is helpful for sales teams working with international clients.

When working with clients across the country or the globe, not having physical access to collect a signature can ultimately mean the demise of a deal. Using an eSign tool like Pipedrive’s Smart Docs may reduce risk, along with being generally legally binding.

An eSignature tool is convenient and cost-effective and provides users with a centralized view of what’s happening with a document at any given time, as well as an audit trail and high-level security.

Learn more about Pipedrive’s Smart Docs tool, a great way to quickly and easily request signatures using just an email address, helping you close deals faster. You can find out why Pipedrive is the top CRM platform by salespeople, for salespeople when you try Pipedrive for free for 14 days.

The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information provided in this article is for general informational purposes only. While the information is considered to be true and correct at the date of publication, changes in laws and legislation after the time of publication may impact on the accuracy of the information. The information may change without notice and Pipedrive is not in any way liable for the accuracy of any information printed and stored or in any way interpreted and used by a user. You should not act or refrain from acting on the basis of any information included in this article without seeking legal or other professional advice.

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