Electronic Signatures: Everything you should know

Living in a digitally connected world has its advantages. The speed at which businesses operate, business operations have picked up the pace, growth is taking place faster, deals are made within seconds, and bank transfers happen within the blink of an eye. Then why should we lag when it comes to document signing?

A signature authenticates a document, and hence it’s a standard obligation at every place. From deals to collaborations and from inception to mergers and acquisitions, contracts are the breath of every business. A hand-signed document warrants the authenticity of the paper as well the intention of its signatory. Yet, it becomes impossible to demand the person’s physical presence every time and place where the signature is needed. This process is neither effective of necessary in the current times.

In the digital age, demanding physical presence has become outdated as many tools, and platforms offer integrated and straightforward online solutions to make life easy. Attaching an eSign or electronic signature is now standard practice and will soon replace signing with a pen and paper. This advancement in technology has eliminated the nuisances of time-consuming processes of affixing a physical signature.

E-signatures are currently being used for:

• ✅ Enable an advanced signing experience

• ✅ Automate business processes

• ✅ Exclude detainments in getting work done

Although the trend has picked up speed, not many are aware of the nuances of an electronic signature and how it works. Let us dive into some aspects of eSign and why it’s fast turning into a global miracle.

What is an electronic signature?

There are different definitions of this worldwide. Easily put, an electronic signature is a digital process of signing and validating documents online. There are many ways to do this. But still, the signature needs to mark the required document, and there has to be a logical relation between the document and the signatory. This makes the electronic signature legally binding, efficient, and cost-effective.

The world currently uses an open-ended definition making electronic signatures an umbrella term to denote various ways of signing digital documents. Some ways included are:

• ✅ The digital signature
• ✅ The handwritten signature in an electronic format
• ✅ The standard electronic signature

Is electronic signature legally binding?

An electronic signature is legally binding to all the parties affixing it around the world. In India, the Government of India (GOI) amended the Information Technology Act 2000 in 2008; to encourage and enhance the use of digital signatures. Now, many governmental and private companies and bodies are endorsing the use of eSign based on the guidelines provided by the IT (Amendment) Act 2008.

ℹ   The Information Technology (Amendment) Act 2008 introduced the Adhar-bases electronic signature.

The current Indian law states that a hand signature is not the only way to validate a document. It is not of grave importance if the parties have reached the agreement physically or electronically; a contract is said to be valid nonetheless.

Although the IT Act encourages the use of eSign, there are only two forms that are considered valid in India:

• ✅ Aadhar e-sign- done through Aadhar eKYC verification services.
• ✅ Digital signature certificate.

Check the rules for a valid eSign

Are electronic signatures and digital signatures similar, or the same?

While these terms are often used interchangeably and are used to validate documents, they are indeed not the same. There are some very noticeable differences that you should know about.

Electronic Signature

The eSign is a digital form of a wet-ink signature. It is secure and legally binding but does not involve any form of coding. An electronic signature can be affixed in any form; symbol, image, or a process attached to the document authenticating the identity.

Because it does not undergo any validation processes by a certificate authority or a trusted service provider, it is not an authorized form of signing. But hey! It is still easy to use.

Digital Signature

A digital signature is more secure. It works alongside the eSign and is dependent on Public Key Infrastructure. Digital signatures have a certain incorporated encryption standard which assists in validating the signatory’s identity. Using a digital signature is ideal when we want to authentic and secure a document.

The validation of a digital signature is done by a trust service provider and certificate authority. Thus, it is an authorized form of signature, making it more secure and authentic than eSign.

What documents are excluded from electronic signatures?

Wet signatures or non-electronic signature is still preferred for in some places over eSign. Let’s take a person filing for bankruptcy. He has to use a wet signature as the e-signature is not considered valid there.

The other instances of where eSign or digital sign is not allowed are:

• ✅ Negotiable instruments (excluding cheques)
• ✅ Power-of-attorney
• ✅ Trust deeds
• ✅ Wills or any such testamentary dispositions
• ✅ Handwritten contract for the sale of property
• ✅ Handwritten conveyance of any immovable property or interest

There are still some countries in the world where an electronic signature is not valid. Countries like Afghanistan, Bahamas, Cuba, Nepal, Fiji, and North Korea are some examples.

What is the state of electronic signature in 2021?

The growth of eSignature has been rapid in the past decade. However, the present condition because of Covid-19 has encouraged the fast movement towards eSigns. Digital signatures also have caught the train to growth and have become more common now.

The pandemic has been pivotal since it increased activities like work from home, schools going online, and the digital horizons expanding across all business verticals. E-commerce companies have also seen aggressive growth since covid-19 began. Collaboration tools, electronic signature tools, etc., also have seen an upsurge in their demands. All of these resulted in multiple platforms embarking on a mission to develop digital tools to facilitate the development of businesses going online.

Is electronic signature secure?

Yes, eSigns are safer than the usual wet signatures that can be easily forged, misused, or tampered with. There is a certain amount of built-in security that requires authentication and proof of transaction, making it admissible in the court of law.

Other factors that amount to the security of eSigns are:

• ✅ Records: All e-signature is backed by an electronic form. This means an auditable trail is taken as proof of a transaction. The trail acts as an entire history of the actions and has details as to when the document was last opened, the time a user took to view it entirely, and also the time when the signature was affixed. You can also track location access if the signer agrees.
• ✅ Completion certificate: It contains more minor details like signature image, timestamps of critical events, IP addresses, etc. If the need arises, this certificate can also involve more information like a signer’s agreement. But, it is best if such additional requirements are included as a separate document.
• ✅ Tamper-proof seal: Once all the signatories complete the signing process, the document is sealed using a PKI, which is considered industry-standard technology. The seal authenticates the validity of the sign and implies that no tampering was done at the time of signing.

As such a significant amount of security measures as taken, there’s no second-guessing that e-signatures are much more secure than the traditional ones.

When should you use an electronic signature?

You can freely use an e-signature where it is not possible to obtain signatures physically. Instances like delaying in obtaining signatures, extensive follow-ups with multi-party signatories, heavy documentations, or work from home conditions demand the implementation of electronic signatures.

You can also opt to use e-signatures for signing hire and onboarding, timesheets, rental agreements, NDAs, internal compliances, expense reporting, PDFs, etc.

An electronic signature is super easy to use and offers a legal status as a safe bet. This is the best-case scenario for businesses working with a limited staff that reduces the errors and makes it easy for the employees to speed things up.

FAQs❓

What is Aadhar eSign?

It is an online e-signature service that facilitated the Aadhar holder to sign a digital document. An OTP is used to affix the sign after biometric verifications.

What are the different types of digital signatures?

Digital signatures are of 3 types. They are:

• ✅ Simple electronic signature (SES)
• ✅ Advanced electronic or digital signature (AEDS)
• ✅ Qualified refined electronic or digital signature (QREDS)

How to check the validity of electronic signatures?

The validity of the digital signature can be checked by:

• ✅ DSC USB token tool
• ✅ Login in and add details
• ✅ Feeding the unique token password
• ✅ Open your certificate
• ✅ Check the Details tab

What is the validity of the electronic signatures?

The digital signature certificates are generally valid for 1 to 2 years, and it has to be renewed after expiry. You would have to, however, resubmit all the required documents.

Provakil is a platform that assists in making the process of affixing an electronic signature easy for you. We help you to create, validate and attach your digital signature to all your digital contracts and documents

If you have any doubts, get in touch with us, and we will hand-hold you through everything.