Electronic Signing has held equal status to "Wet" Signing since 2000, when it was first legalized under the ESIGN Act and other international laws.
However, there are some but not too few exceptions where you need to sign using a pen and paper.
An electronic signature solution (or digital signature) is a type of electronic authentication method that allows one party to prove their identity by signing a document using a private key. It is typically used for legal purposes, but may be applied to any kind of transaction where authenticity needs to be proven.
Efficiently and securely, digital (or electronic) signature technologies are used by companies to receive legally binding consents from agents while they're on calls with them.
Moreover, the particularities of electronic signature laws vary from one jurisdiction to another. We will explore the legal status of electronic signatures in the United States.
The Encryption Technology Underlying Legal e-Signatures
A legally binding electronic signature requires the use of a technology known as Public Key Infrastructures (PKIs) which enable the secure management of electronic signatures.
A digital signature is created using a private key. Only the person signing the document knows the corresponding public key; anyone who verifies the signature must know the public key.
Once the signer has signed the document, a cryptographic hashing algorithm creates a unique digital signature for the document. A private key then encrypts the signature and securely saves it in a safe place. The encrypted signature is then attached to the document and sent to the recipients.
With the help of the public key certificate, recipients can verify the validity of an electronic document by comparing its digital fingerprint with the one embedded within the document itself.
Types of Electronic Signatures
There are three main types of electronic identification systems. These include digital certificates, public key infrastructure (PKI), and tokenization.
This law regulates the electronic identification, signature process, seals, and documentation throughout Europe. They're commonly used by companies and web services as defaults, and they've become ubiquitous in the online world.
Simple Electronic Signatures (SES)
Electronic Signatures are broadly defined as “electronic forms of identification” (eIDs) that include digital signatures. An eIDAS definition states that an electronic signature must be “associated with other electronic information” and that its use must be “to authenticate the identity of the person who signs the electronic information.”
In some cases, simple electronic signatures can be considered legally binding. However, for many documents, higher qualifications must be met.
Advanced Electronic Signatures (AES)
While electronic documents may not require any type of signature, they must contain an identifiable author who can vouch for the authenticity of the information contained within them. In addition to being signed, the author should also include his/her name, company affiliation, contact details, and date of creation.
Qualified Electronic Signatures (QES)
These are similar to qualified electronic signatures, but they also go further to meet additional regulatory mandates. Qualified electronic signatures (QEIS) must have a digital signature based on public key certificates that were issued using proper technological means. They also must have prior verification of the signatory by a certified entity, such as a certification agency. This verification can be done either in person or remotely via video chat.
History of US eSignature Laws
During the late 1990’s, online transaction became a norm in the United States. The need arose to make electronic signatures legally binding. It was not until 1999 that the National Conference of Commissioners introduced the Uniform Electronic Transactions Act (UETA), which gave legal force to electronic signatures. However, the UETA only acquired authority through the enactment of states legislators. Therefore, its validity depends upon the states.
After that, the U.S. Congress passed the Electronic Signatures in Global and National Commerce Act (ESIGN), which recognized the importance of electronic transactions and revised some commerce-related laws.
Thus, together with the UETA, they help to ensure the legitimate use of electronic records and eSignature documents for commercial activities.
The Electronic Signatures in Global and National Commerce Act (ESIGN) was signed into law by President Bill Clinton on October 21, 2000. It gives legal status to eSignatures and eRecords.
UETA (Uniform Electronic Transactions Act) became effective in 1999. It allows for electronic signatures and records to be used instead of paper documents.