Digital Signatures Now Permissible by law

The process of obtaining written signatures on contracts has long been a serious challenge for businesses in the B2B sector. It can lead to lowered productivity, difficulties in closing deals and delayed projects.

Electronic signatures have been used for many years, but they have long been questioned from a legal point of view, which has led business owners to put off relying on them.

The good news is, however, that in 2016, a significant milestone came about concerning the adoption of e-signatures. The new Regulation on Electronic Identification and Trust Services for Electronic Transactions in the Internal Market (eiDAS) was law as of July, and at the same time, The Law Society and The City of London Law Society published a practice note, endorsing the use of e-signatures.

Running a business in this day and age makes you fully aware of how going digital can bring numerous advantages across all manner of elements of your operation. But when it comes to digital signatures, you could well have found yourself frustrated, especially as the legality of these signatures has been less than clear. The e-Signature Directive has been around since 2000, however the fact that individual EU member states have been able to decide for themselves as to how it could be implemented nationally meant inconsistencies were rife.

The new practice note has, thankfully, brought with it a much more clarified understanding of the legal requirements when it comes to using electronic signatures, which means they are now legally sound for use in contracts under English law.

The Benefits of Electronic Signatures

The electronic signature delivers a host of advantages including efficiency and cost savings. Manually signed documents mean printing, scanning and posting, but none of this is necessary with the e-signature. Contracts get signed far more quickly, which means far fewer delays in getting deals closed and projects commenced.

Another benefit is that electronic signatures leave a digital audit trail which makes it easier to remedy disputes. Digital signature platforms like DocuSign and HelloSign allow the verification of the signatory, giving details of who signed the document, when and where. These audit trails mean businesses can demonstrate any necessary compliance with regulatory parameters and data protection legislation. The audit trails are also legally admissible under the Electronic Communications Act 2000.

Electronic signature platforms also deliver secure cloud storage for all documentation, and providing they are certified to ISO 27001, they will ensure you are conforming to security management standards.

‘Digital signatures’ are an advanced type of electronic signature, noted by the Regulation as ‘qualified electronic signatures’. This type of electronic signature is supported by a digital certificate courtesy of the platform provider which verifies the identity of the signatory. Digital signatures are preferred by sectors such as banking, as the added security and advanced level of identity checking are most important in these areas.

If you are thinking about using e-Signatures for your business contracts but are not sure about whether they will be legally binding, why not contact your local bookkeepers for advice?

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