What Is an Electronic Signature?

Understanding Electronic Signatures

An electronic signature is a digital sound, symbol, or process attached to or logically associated with a record that indicates a person's intent to sign the document. It serves as the electronic equivalent of a handwritten signature and is recognized by laws such as the U.S. ESIGN Act and UETA as legally valid for most business and personal transactions. Electronic signatures enable agreements and approvals to be completed digitally, streamlining workflows and reducing reliance on paper.

Types of Electronic Signatures

Electronic signatures vary in complexity and security:

• Basic Electronic Signatures: These include actions like typing a name, clicking an "I agree" button, or pasting an image of a signature. They are simple to use but may offer limited assurance about signer identity.
• Advanced Electronic Signatures: These use additional security measures such as certificates or encryption to verify the signer’s identity and ensure document integrity.

It is important to distinguish electronic signatures from digital signatures. Digital signatures are a subset of electronic signatures that use cryptographic techniques to provide higher security and authentication.

How Electronic Signatures Work

Electronic signature solutions typically allow users to upload documents, add signature fields, and send them to recipients for signing online. The signer accesses the document via a secure link, applies their signature, and the system records the event with timestamps and audit trails. This process ensures the signature is linked to the document and the signer’s intent is captured.

Legal Framework: ESIGN Act and UETAIn the United States, the ESIGN Act and the Uniform Electronic Transactions Act (UETA) provide the legal foundation for electronic signatures. These laws establish that electronic signatures cannot be denied legal effect solely because they are electronic. They require that the signer consents to use electronic records and that the signature process reliably associates the signature with the record.

How to Choose an Electronic Signature Solution

• When selecting an electronic signature tool, consider these criteria:
• Security: Look for features like secure links, audit trails, and encryption.
• Usability: Evaluate ease of sending documents, signing process, and recipient experience.
• Compliance: Ensure the solution supports record retention and legal requirements relevant to your jurisdiction.
• Integration: Check if the tool offers APIs or templates to streamline recurring workflows.
• Pricing Model: Understand whether pricing is flat, per user, or per document to fit your budget.
• Control: Consider options for setting signing order, expiration dates, and reminders.
• Hosting: Decide if you need cloud-based or self-hosted deployment for data control.

Common Pitfalls to Avoid

• Assuming all electronic signatures are the same: Different types offer varying levels of security and legal assurance.
• Neglecting audit trails: Without detailed records, it may be difficult to prove the validity of a signature if contested.
• Ignoring expiration and reminders: Documents left unsigned can delay processes; automated reminders and expiration dates help manage this.
• Overlooking user experience: Complex signing processes can frustrate recipients and reduce completion rates.

Security and Audit Basics

Effective electronic signature solutions provide:Audit trails that log all document activity, including timestamps and IP addresses.Secure links to prevent unauthorized access.Document status tracking to monitor progress.These features help maintain transparency and support compliance efforts without exposing sensitive data.

Pricing and Usage ConsiderationsPricing models for electronic signature services vary widely. Some offer flat annual fees without per-document charges, while others charge per signature or user seat. Understanding your volume and usage patterns helps in choosing an economical option. Additionally, some solutions allow unlimited team members as admins and provide reusable templates to reduce repetitive setup.

Best Practices for Using Electronic Signatures

• Always verify the identity of signers when necessary.
• Use templates for frequently used documents to save time.
• Set signing orders when multiple parties are involved to ensure proper workflow.
• Enable automated reminders and expiration dates to keep processes on track.
• Download and securely store audit trails and finalized documents for record-keeping.

Regularly review your electronic signature policies to align with legal and organizational requirements.

A Practical Option: GoSign (example)

GoSign is an example of an electronic signature platform that supports sending documents to multiple recipients, creating reusable templates, and setting signing orders. It offers secure links for signing, automated reminders, and detailed audit trails showing document activity. Users can download finalized signed documents and track status from a centralized dashboard. GoSign also provides options for API access and self-hosting, allowing organizations to tailor deployment to their needs.

Electronic Signature ChecklistConfirm signer consent to use electronic signatures.Choose the appropriate type of electronic signature based on security needs.Use a solution that provides audit trails and secure access.Set signing order and expiration dates for multi-party documents.Utilize templates for recurring documents.Enable automated reminders to prompt signers.Download and archive signed documents and audit logs.Regularly review compliance requirements related to electronic signatures.

FAQ

What is an electronic signature legally?

An electronic signature is a digital mark or process that indicates a person’s intent to agree to or approve a document, recognized as legally valid under laws like the ESIGN Act and UETA.

How is an electronic signature different from a digital signature?

A digital signature is a specific type of electronic signature that uses cryptographic technology to verify signer identity and document integrity, offering higher security than basic electronic signatures.

Can I use electronic signatures for all types of documents?

Most business and personal documents can be signed electronically, but some documents, such as wills or certain court filings, may require handwritten signatures depending on jurisdiction.

How do electronic signatures ensure security?

Security is maintained through secure links, audit trails that record signing events, encryption, and options to set signing orders and expiration dates.

What happens if a signer does not complete the signature?

Automated reminders can be sent to prompt signers, and expiration dates can be set to close signing requests after a certain period.

Are electronic signatures accepted internationally?

Acceptance varies by country, but many jurisdictions have laws recognizing electronic signatures. It is important to verify local regulations before use.

How can I track the status of documents sent for electronic signature?

Most platforms provide dashboards or tracking features that show document status, including who has signed and who is pending.

What should I look for in an electronic signature provider?

Look for security features, ease of use, compliance support, pricing transparency, integration capabilities, and options for controlling the signing process.

Is it possible to integrate electronic signatures into existing workflows?

Many electronic signature solutions offer APIs and reusable templates to automate and integrate signing into business processes.

Can I host electronic signature software on my own infrastructure?

Some providers offer self-hosting options, allowing organizations to run the software within their own infrastructure for greater control over data and security.