What Makes Electronic Signature Legally Binding?

by Aishwarya Gaikwad
What Makes Electronic Signature Legally Binding

With all the digitization in the current world, and everything seems to be taking that route. Online shopping is probably the most notable trend, but along with it, business functions that are complex are getting automated. It is providing a perfect picture of how the future is set up. Electronic signatures or eSignatures have gained popularity over the last couple of years.

However, while it may look like it is straightforward to online append a signature to a document, most people have concerns regarding electronic signatures’ legality. eSignatures are somehow easy to collect, but there are some stipulations you must know. For an eSignature to be legally sound, several factors must be met.

A legitimate intent to sign

For traditional signatures, they only get valid when its originator willingly signs the document themselves, and it is not any different with eSignatures. In some situations, a signer can type their name and accept to use it as their signature, while in others, a computer cursor or mouse can be used to draw names by signers. Whatever option you pick, you must show a clear intent to append your signature.

Consent to conduct business electronically

Besides showing a clear intention to submit the signature, you must look for proof that all the parties involved consented to conduct business electronically. Most companies might choose to include a consent clause that requires everyone signing to accept the activity before submitting the signature officially.

Record of the electronic signature

During the time when the signature is being executed, a record should be created detailing the process through which the document was accepted by the signer. For documents exchanged via email, the email trail acts as proof of transaction. This popular service generates audit reports which can be used for purposes of record keeping. Just because everything is done via electronic means does not repudiate the need for record-keeping. A record is a strong evidence that can be handy for reference purposes.

Signed copies

Whenever there is a requirement for signing documents, there must be some parties involved. If so, for the electronic signature to have any legal remedy, the parties involved should get a copy of the document after signatures have been appended. In most cases, eSignature applications are automatically sent. With a signed copy, you understand the agreement, and you can keep it as a record whenever its need arises.

An opt-out clause

Like with every other document that requires signing, for a signature to be legally sound, the signer must be afforded an option to decline to sign electronically and instead get a physical copy that requires them to sign in person and then send back the document. It might be a rare occurrence, but any business or company that requires the use of eSignatures must be prepared for it. It is a way of not getting people to lack alternatives, especially when they are not comfortable conducting everything online.

Identity verification

Every electronic signature must allow the identity of the signer to be verifiable. Verifying the identity can be done in several ways, like SMS, email, and electronic ID. Please note that methods that have stricter identity control provide users a higher level of security. Any information concerning document requests of the contract is automatically logged. Please note that while verification might make eSignatures legally binding, none of the verification methods provide 100% security. Still, digital is in most cases better than analog alternatives.

Please note that electronically gathered signatures must use similar security measures to ensure other documentation and other business integrity. The above factors are an excellent way of determining legally binding eSignatures. Considering that your business or company is a worthwhile investment, you must do everything possible to protect it. Electronic signatures should not be a loophole that undermines your operations. Instead, it should be a platform for increasing convenience and ensuring transactions are smooth and effortless.

Every business must protect itself, and that is why you must pay attention to how you collect your signatures. Adopting electronic signatures is a smart move for any business. It makes transactions more convenient and easier to carry out.  While there is a lot to consider, when you have the suitable systems set up, the use of the eSignatures makes things more straightforward for employees and customers as well.

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