eMudhra Blog eSignature and Legal Compliance

eSignature and Legal Compliance: Ensuring Legal Validity of eSignature/Digital Signature

By eMudhra Editorial on April 19, 2023
eSignature and Legal Compliance: Ensuring Legal Validity of eSignature/Digital Signature

The world has gone digital so is the way of conducting business. As the adoption of eSignature continues to grow, businesses are increasingly relying on these to streamline their operations and enhance their efficiency. However, with the convenience of eSignature also comes the need to ensure their legal validity and compliance with jurisdictional regulations. With the advent of electronic signatures, the legal landscape has undergone a significant transformation. The validity of eSignature has been a subject of much debate and scrutiny.

In this blog, we will explore the intricacies of eSignature and delve into the legal landscape surrounding its use. We will examine the different types of eSignature and their respective legal frameworks, measures taken to ensure legal compliance and the challenges that arise in ensuring their compliance. 

What is eSignature?

eSignature is the digital equivalent of traditional handwritten signatures, used to signify the signer's intent to agree to the terms and conditions of a document or transaction. The definition and legal framework for eSignature vary across different countries, with the eIDAS regulation in the EU, the ESIGN and UETA acts in the USA, and the IT Act in India providing the legal framework for their use.

According to eIDAS, an electronic signature is defined as "data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign." The regulation recognizes three types of electronic signatures: simple, advanced, and qualified, each with varying levels of legal validity and technical requirements.

According to ESIGN, an electronic signature is "an electronic sound, symbol, or process, attached with a contract or other record and executed or adopted by a person with the intent to sign the record." Similarly, UETA defines an electronic signature as "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."

Are Electronic Signatures Legally Valid?

Yes, electronic signatures are legally valid. The use and legalization of eSignature online can be traced back to the late 90s with the enactment of the IT Act of 2000. The systemic formation and implementation of e-Signature laws around the globe can be pinpointed to the EU’s Electronic Signature Directive of 1999, the US Uniform Electronic Transactions Act of 1999, and the Electronic Signatures in Global and National Commerce Act (E-sign Act) of 2000. These were some of the early laws that legalized the use of eSignature for enterprises and businesses

As discussed, countries have distinct legal frameworks governing eSignature, and it is important to understand these frameworks to ensure compliance. Let's delve deeper into the legal framework supporting the validity of signatures. Here we will primarily discuss laws governing eSignature in USA, Europe, and India.

eSignature Legal Requirements in the USA

In the United States, the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA) are the two primary federal laws governing electronic signatures. ESIGN and UETA recognize electronic signatures as valid and enforceable, provided they meet certain requirements. These include identifying the signatory, indicating their intent to sign, and ensuring that the signature is linked to the document being signed.

In addition to these federal laws, each state in the US has its own set of laws and regulations regarding electronic signatures. For example, some states require additional authentication measures for eSignature, such as biometric identification or a specific type of signature technology.

eSignature Legal Framework in India

In India, the Information Technology Act, of 2000 governs electronic signatures. Under the Act, electronic signatures are considered valid and legally binding, provided they meet the prescribed legal requirements. The Act specifies the use of digital signatures for secure online transactions, and it recognizes electronic signatures as an acceptable alternative to physical signatures.

The Indian government has also introduced the eSign framework, which enables the use of Aadhaar-based eSignatures for authentication and verification purposes. This framework has enabled more widespread use of eSignature across the country and has helped to increase its legal validity. IT Act also recognizes an asymmetrically encrypted and hashed digital signature. In such eSignature, the signer acquires a digital certificate in the form of a USB token to authenticate the signature. These signatures are given the same credibility as handwritten signatures in a court of law.

eSignature Legal Framework in EU

In the European Union (EU), electronic signatures are regulated by the eIDAS Regulation (EU) No 910/2014, which provides a comprehensive legal framework for the use of electronic signatures, seals, and time stamps. The regulation recognizes three types of electronic signatures: simple, advanced, and qualified, each with varying levels of legal validity and technical requirements. Qualified electronic signatures, which are subject to the highest level of security measures and verification, are considered equivalent to handwritten signatures and are legally binding and enforceable in all EU member states.

Furthermore, the eIDAS regulation establishes a system of trust services, which includes electronic signature creation and verification, to ensure the security and reliability of electronic signatures. This system is overseen by the European Commission, which maintains a list of qualified trust service providers (QTSPs) who have met the strict requirements for providing trusted services in the EU.

While many countries have adopted similar legal frameworks for electronic signatures, the legal validity of electronic signatures varies across the globe. The cases of the US, EU and India illustrate the importance of having clear legal guidelines for eSignature and the potential benefits of utilizing digital signature technology to facilitate secure and efficient transactions.

Digital Signature vs Electronic Signature: What's the Difference

As rapid digitization of processes takes over the market space, digital signatures and eSignature are the two terms that you might come across. While the terms tend to be used interchangeably, there are significant differences between digital signatures and electronic signatures.

An electronic signature is a broad term that refers to any method used to sign a document electronically. It can be as simple as typing your name at the end of an email or using a stylus to sign a document on a tablet. Electronic signatures do not require any encryption, and they are not secure, making them vulnerable to fraud and tampering.

On the other hand, a digital signature is a type of electronic signature that uses encryption technology to provide added security and verification. Digital signatures are created using a mathematical algorithm that ensures the authenticity and integrity of the signed document. Digital signatures are much more secure than electronic signatures as they cannot be altered or copied without detection.

Digital signatures also provide legal protection for both parties involved in the signing process. They are recognized as legally binding in most countries worldwide and are admissible as evidence in court. Digital signatures are commonly used where security and authenticity are of utmost importance.

While electronic signatures are convenient, they lack the security and legal protection provided by digital signatures. If you are looking for a secure and reliable way to sign, the digital signature is the way to go. 

Validity of Online eSignature Solutions like emSigner

The validity of online eSignature Solutions like emSigner is unquestionable. Tools like emSigner is a great solution for digital signatures and have gained popularity due to their flexibility, reliability, higher level of security, and ease of use. It uses advanced asymmetric encryption technology and secure servers to ensure the authenticity and integrity of the signed documents. 

Additionally, the platform complies with national and international regulations, rendering them legally binding. In simpler terms, digital signatures generated by emSigner are legally binding and can be used to authenticate digital documents in a court of law. The validity of these digital signatures is often higher than that of wet signatures, as they leave a more comprehensive digital trail and are harder to forge.

emSigner is becoming a preferred choice for individuals and businesses looking to streamline their document signing process while maintaining the highest level of security.

eMudhra Driving Your Digital Transformation

Digital signatures are transforming the way businesses operate by enabling them to work more securely and productively. Whether you are a small business owner, a large enterprise or an individual looking for an efficient way of document execution, digital signing is the key. eMudhra’s emSigner platform offers a seamless way to digitally sign, streamline and customize workflows instantly using eSignature or digital signature in a few simple clicks.

With our user-friendly interface, top-notch security features, and excellent customer support, eMudhra makes it easy to sign and authenticate digital documents quickly and securely. eMudhra offers a range of flexible plans that can be tailored to suit your specific needs. So, why wait? Choose eMudhra today and experience the convenience of having a reliable digital signature solution at your fingertips.

Contact us now! for Digital Signature Solutions

Are you ready to embrace digital?