E-signature laws around the world

Our increasingly interconnected world has made it essential that businesses and professionals can seamlessly collaborate online. And e-signatures have become a big part of that process. Much like the contracts that they guarantee, e-signatures are subject to a variety of country-specific regulations. All e-signature laws around the world focus on two main types of electronic signatures: E-signatures and Digital signatures. To handle international contracts effectively, you’ll need to understand the difference between them.

Difference between e-signatures and digital signatures

Those unfamiliar with digital signing often assume “e-signature” and a “digital signature” mean the same thing, but there’s a significant difference in the security each provides.

Definition of an e-signature

E-signatures represent a broad category of signing methods. You might be asked to enter your name in a form field, check a box, or both. Often, data related to your entry (i.e., IP address, account ID) will be logged to create an audit trail.

Definition of a digital signature

Digital signatures create a unique file and alphanumerical identifier. The combination of this file and identifier acts as “virtual fingerprint,” connecting the signature to the involved parties and document.

E-signatures are generally easier to implement and offer enough security for most contracts. In contrast, digital signatures provide a level of verification and traceability that’s best for sensitive documents.

The spectrum of legal standards for e-signatures

Most industrialized countries recognize some form of electronic signatures. While some assign the same value to e-signatures and physical “wet” signatures, others have stricter requirements. Overall, there are three types of laws most countries have on e-signatures:

• Permissive
  Laws in this category treat all types of electronic signatures as equal to wet signatures, no matter the method. (Ex. The US’s ESIGN Act of 2000)
  
  
• Prescriptive
  These laws are at the strictest and the rarest type used today. They specify strict technical requirements for e-signatures and digital signatures to have legal validity.
  
  
• Multi-Tiered
  Laws with multi-tiered requirements (usually two tiers) for electronic signatures apply permissive standards for most private contracts. For certain contracts and documents, often those involving property or wills, prescriptive standards are applied instead.

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A Guide to E-Signatures Laws Around the World

Over 60 countries have laws regarding e-signatures, and frequently, new adopters are basing laws on the United National’s 2001 UNCITRAL Model Law on Electronic Signatures. For this overview, we’ll focus on those with well-developed rules.

North America

United States

Since 2000, the US has federally recognized e-signatures as legally binding with exclusions for contracts such as wills and transfers of property. Over the years, states have added their own regulations.

• Laws:
  • ESIGN Act – Federal-level
  • UETA – State-level, adopted by 47 states, DC, the US Virgin Islands, and Puerto Rico
• Standard: Permissive

Canada

In Canada, the method of obtaining the signature must clearly indicate the relevant agreement or contract, and all parties must agree to use electronic signatures.

• Uniform Electronic Commerce Act, 2000
• Standard: Permissive

Both Canada and the United States require many of the same documents to use wet signatures, including title documents, investment certificates, wills, and power of attorney agreements, among others.

Mexico

Mexico recognizes e-signatures but requires certified digital signatures for certain official and tax-related documents.

• Laws:
  • The Federal Civil Code 
  • The Federal Commerce Code
• Standard: Tiered

South America

Argentina

Argentina broadly recognizes e-signatures as valid unless the contract is legally required to be completed on paper (i.e., a deed). However, companies need to use a certified signing platform for digital signatures.

• Law: The Digital Signature Act
• Standard: Tiered

Brazil

Most common contracts can use electronic signatures, and Brazil established its Public Key Infrastructure, which dictates the relevant technical requirements.

• Laws
  • The Brazilian Civil Code
  • The Provisional Executive Act
• Standard: Prescriptive

Europe

European Union (EU)

The EU’s e-signature rules define simple, advanced, and qualified (aka digital) electronic signatures, which are allowed on different documents. These rules apply across all member countries, which may have additional regulations. Some European countries outside the EU, like Norway and the United Kingdom, have based their e-signature laws on the EU model.

• Law: European Directive 1999/93/EC
• Standard: Tiered

United Kingdom (UK):

The UK’s rules accepting e-signatures apply to England, Scotland, and Wales.

• Laws:
  • Electronic Communications Act
  • Electronic Identification and Trust Services for Electronic Transactions Regulation
• Standard: Tiered

Asia

China

Both e-signatures and digital signatures are valid, but signatures with more verification are recommended for sensitive contracts or documents.

• Law: Electronic Signature Law of the People’s Republic of China
• Standard: Tiered

India

India allows electronic signatures, with additional requirements for digital signatures. Some documents, like wills or real estate contracts, still require physical signatures.

• Law: Information Technology Act
• Standard: Tiered

Japan

E-signatures are broadly considered valid, but legal documents submitted to the government usually need digital signatures that meet Japan’s authentication standards.

• Laws:
  • Law Concerning Electronic Signature and Certification Services
  • Personal Information Protection Act
• Standard: Tiered

Oceania

Australia

Australia’s e-signature law has similar rules to that of the US, equating the validity of e-signatures and digital signatures. 

• Law: Electronic Transactions Act
• Standard: Permissive

New Zealand

All parties must agree to the signing method in advance, but otherwise, the rules are similar to other English-speaking countries listed here.

• Law: Electronic Transactions Act
• Standard: Permissive

Conclusion

E-signatures can add convenience and security to conducting business remotely, but the signing method must be appropriate for the countries and documents involved.

Today, only a handful of countries have permissive laws on e-signatures. Fortunately, most other countries use a tiered system, which makes using a reliable e-signature service like Countersign a viable option for most business use cases, including freelancers, landlords, and other professionals.

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