Living in a digitally connected world has its advantages. The speed at which businesses operate has accelerated; growth is happening faster, deals are made within seconds, and bank transfers happen in the blink of an eye. Then why should we lag when it comes to document signing?
A signature authenticates a document; hence, it’s a standard requirement everywhere. From deals and collaborations to inception and mergers and acquisitions, contracts are the bread of every business. A hand-signed document warrants the authenticity of the paper as well as the intention of its signatory.
Yet it becomes impossible to demand the person’s physical presence at every place where a signature is needed. This process is neither effective nor necessary in the current times.
In the digital age, the demand for physical presence has become outdated, as many tools and platforms offer integrated, straightforward online solutions that make life easier. Attaching an e-signature is now standard practice and will soon replace pen-and-paper signing. This technological advancement has eliminated the nuisances of time-consuming processes for 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 people are aware of the nuances of electronic signatures and how they work. 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. Put simply, an electronic signature is a digital process for signing and validating documents online. There are many ways to do this. But the signature still needs to mark the required document, and there must be a logical relationship 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, treating electronic signatures as an umbrella term for 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 on all parties affixing it, worldwide. 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 government and private companies and bodies are endorsing the use of eSign in accordance with the guidelines provided by the IT (Amendment) Act 2008.
ℹ The Information Technology (Amendment) Act 2008 introduced the Adhar-bases electronic signature.
Current Indian law states that a handwritten signature is not the only way to validate a document. It is not of grave importance whether the parties have reached the agreement in person or electronically; a contract is 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.
Are electronic signatures and digital signatures similar, or the same?
While these terms are often used interchangeably and to validate documents, they are 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: a symbol, an image, or a process attached to the document, authenticating the identity.
Because it does not undergo validation by a certificate authority or 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 eSign and depends on Public Key Infrastructure. Digital signatures incorporate a specific encryption standard that helps validate the signatory’s identity. Using a digital signature is ideal when we want to authenticate and secure a document.
The validation of a digital signature is done by a trust service provider and a 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 signatures are still preferred 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 where an electronic signature is not valid. Countries such as Afghanistan, the Bahamas, Cuba, Nepal, Fiji, and North Korea are examples.
What is the state of electronic signature in 2021?
The growth of eSignature has been rapid in the past decade. However, the present COVID-19 situation has encouraged rapid adoption of eSigns. Digital signatures have also caught the growth train and have become more common.
The pandemic has been pivotal, as it increased activities such as work-from-home, schools going online, and the expansion of digital horizons across all business verticals. E-commerce companies have also seen aggressive growth since COVID-19 began. Collaboration tools, electronic signature tools, etc., have also seen an increase in demand. All of these led multiple platforms to embark on a mission to develop digital tools to facilitate 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 the transaction, making it admissible in court.
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 have been taken; there’s no second-guessing that e-signatures are much more secure than traditional ones.
When should you use an electronic signature?
You can freely use an e-signature when physical signatures are not possible. Situations such as delays in obtaining signatures, extensive follow-ups with multi-party signatories, heavy documentation, or work-from-home conditions demand the use of electronic signatures.
You can also opt to use e-signatures for hiring and onboarding, timesheets, rental agreements, NDAs, internal compliance, 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 with limited staff, as it reduces errors and makes it easier for employees to speed things up.
FAQs
What is Aadhar eSign?
It is an online e-signature service that enables Aadhaar holders to sign digital documents. 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.
Maitreyee works as a content writer on the team. She is a lawyer by education and is passionate about creating content for the legal community that is relevant and thought-provoking.
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