Difference between an electronic signature and a digital signature

Electronic signatures are the fastest, most reliable and collaborative option to collect signatures on various documents. With an electronic signature you can close deals faster and have an audit trail, instead of waiting to receive a document with a handwritten signature. This translates into more productivity and transparency.

Electronic signatures are becoming more popular due to the widespread adoption of digital work practices and the remote work model.

However, many still have doubts about the legality of electronic signatures. In other words, they doubt whether something signed electronically, instead of by hand, has legal value in the eyes of the law.

There are laws that dictate and protect the use of electronic signatures in the United States and in other countries around the world. That said, are electronic signatures legal? The short answer is yes”. In more than 180 countries, documents with electronic signatures are valid and the laws are quite permissive.

The use of electronic and digital signatures is widely accepted in law and has the same validity in court as a handwritten signature

In cases where there are legal exceptions, it does not mean that these signatures cannot be used. It means that there are probably additional requirements for legal enforceability.

Here are some specific details about the legal implications of electronic signatures. In addition, we explain how to choose the right tool to collect the electronic signatures of your company.

What is an electronic signature?

An electronic signature allows you to obtain approval or consent on your digital contracts or agreements. By using the electronic signature, there is no need to print a document and add a handwritten signature, which speeds up the signing process.

  • Adding an electronic signature is simple, similar to signing a paper document.
  • In most countries, an electronic signature is just as legal as a handwritten signature. But you should always check the current legislation in the place where you live and where the other parties that are going to sign the document reside.
  • An electronic signature can be as basic as adding a name to a digital copy.
  • Electronic signatures are very popular and the market is expected to grow quite a bit in the coming years.
  • The English term Esignature (e-signature) is a broad way of naming different types of electronic signatures. Includes digital signatures whose purpose is different.

What is the difference between an electronic signature and a digital signature?

The terms electronic signature and digital signature are often used interchangeably. And although they have similar purposes, there are differences between them. A digital signature is a specialized subgroup of electronic signatures.

Digital signatures are an advanced type of electronic signatures. They have a higher degree of verification and authentication of the person signing the document, and of the identity of the document.

  • Digital signatures, above all, have advanced security and legal compliance features.
  • Digital signatures have enhanced audit trail capabilities and backend tools to ensure their authenticity.
  • A digital signature uses an algorithm to create a unique fingerprint or private key for each document.
  • Public Key Infrastructures (or PKIs), a set of policies and procedures required to create and issue digital certificates, are used with digital signatures.
  • A PKI determines the identity of the individuals who use it.
  • A PKI offers benefits such as: controlled access to systems and resources, data protection and better accountability.

Although all types of electronic signatures offer benefits, not all electronic signature software have the same features.

For example, Pipedrive’s Smart Docs tool allows you to collect digital signatures, specially designed for the sales industry, with a public key infrastructure (PKI) and certification for added security. Smart Docs’ centralized documentation process and cloud storage help users close deals faster. These features are perfect if you work on the go.

Are electronic signatures legally binding?

Electronic signatures are legally binding almost everywhere in the world. In the United States and Europe, the use of electronic signatures is governed by specific laws. In other places, such as Mexico, there is no unified legislation, but there is legal recognition.

United States

  • In the United States, electronic signatures are legal. They are protected by the Electronic Signatures in Global and National Commerce Act , or ESIGN , for its acronym in English. The state and territory versions of the Uniform Electronic Transactions Act (UETA) also apply .
  • According to ESIGN, electronic signatures and records are protected by law when they are part of a transaction. A transaction, according to the ESIGN, is a series of actions associated with carrying out business, commercial or consumer relationship matters.
  • An electronic signature is considered any process, sound or symbol associated with a record and used as a signature. Under US law, the legal validity or enforceability of an electronic signature cannot be denied solely because it is in electronic form.

Canada

  • Under 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 it and the process or technology used is exclusively under the control of the signatory.
  • In Canada, an electronic signature has the same legal status as a handwritten one. To ensure a uniform approach, Canada passed the Uniform Electronic Commerce Act .
  • However, Quebec has a different but similar law. This law recognizes that electronic signatures and documents have the same legal value as hard copies.

United Kingdom

  • The use of electronic signature options has been legal in the UK since 2000. That year the Electronic Communications Act of 2000 was passed.
  • In 2016, the UK adopted the European Parliament Regulation guidelines on electronic identification and trust services for electronic transactions. Since 2019 (after the UK left the EU), the electronic identification and trust services regulations for electronic transactions have been in force.
  • That is, there are general laws and guidelines adopted in the UK that allow the use of electronic signatures and records.

European Union

  • In most countries of the European Union, including Germany, electronic signatures have been legal since the early 2000s. With the approval of the eIDAS regulation in 2016, the process and acceptance of electronic signatures in the countries was standardized. Union members.
  • The use of this type of signature is allowed in the commercial field and is admitted in court.
  • Under European Union law, it is not necessary for a document or contract to be presented with a handwritten signature to be reliable. All companies within the EU must follow the standard regulation regarding electronic signatures.

Brazil

  • Provisional Measure 2.200-2 (provisional measure by virtue of law) allows companies to use electronic signatures in Brazil. This law has been in force since 2001 and, as in other countries, electronic signatures are not only used in business but are also recognized in court.
  • In Brazil, a handwritten signature is not necessary to validate a document. In addition, electronic IT solutions can be used to support contracts and provide records as evidence in court.

Mexico

  • Contrary to the places just mentioned, Mexico does not have a specific law that regulates the use of electronic signatures. That said, are electronic signatures legal in Mexico?
  • Yes, and more are used every day. In the case of this country, two laws are usually applied: the Federal Civil Code and the Federal Commercial Code.
  • Electronic signatures generally have the same validity as handwritten signatures. As in most of the world, they are considered to have the same legal status and are admitted as evidence at trial.

What are the advantages of using an electronic signature?

In addition to the peace of mind that documents with electronic signatures are often valid in court, there are other benefits of using an electronic signature process in your company. We list them below:

  1. Electronic signatures are usually legally binding. There are only a few exceptions in which the electronic signature of a document does not have legal protection.
  2. You avoid wasting time. With an e-signature tool you can close deals efficiently and conveniently instead of wasting time exchanging hand-signed hard copies.
  3. Practicality and ease are key when it comes to winning a deal. The electronic signature makes work easier for clients. With this solution they can sign a document at any time and from anywhere.
  4. You eliminate waiting and obstacles. Anything that speeds up the closing of a deal is a wise move. That is why electronic signatures stand out. If someone is holding up a process or something is getting in the way (like a contract that’s taking a long time to arrive in the mail or a lack of access to a printer), you can identify the problem faster and fix it.
  5. You save money by eliminating paper from your operations. You reduce expenses on equipment, materials, and other items associated with manual processes.
  6. You get advanced security controls to protect data and documents. Security should be a priority for any business. Electronic signature tools include audit trails, which can be key when it comes to a legal dispute or to clarify a problem.
  7. You get a centralized view of your contracts. Sales professionals sometimes have to go through multiple channels to find out the status of a deal. By using electronic signatures, audit trails are created for each participant. If you’re using Smart Docs, you can save signed contracts to the corresponding deal within Pipedrive for more visibility.
  8. You reduce the environmental impact. Companies must reflect on their internal culture and consider the values ??of their customers, for example, in relation to eliminating the use of unnecessary paper. This is a way to demonstrate the values ??and sustainable goals of your organization.
  9. You encourage collaboration . You collect the necessary information from each party, and you promote that the deals advance in the funnel and internal communication is more fluid.

 

Katz

Professional writer with more than 7 years of experience. Joseph has worked as a content creator and editor on different web pages. He has been coordinator and content manager in various editorial teams. He also has extensive experience in SEO and digital marketing.