When are electronic signatures not valid

Jul 14, 2021

With the increase in remote work and virtual transactions, the demand for digital documents has skyrocketed. That’s why more and more people use e-signatures apps like Countersign to get contracts and other documents signed securely and efficiently. However, are you uncertain if an electronically signed document will be accepted? Keep in mind that e-signatures are valid only if they meet specific legal criteria. 

Below are the criteria for when electronic signatures are not valid.

Signs that an e-signature is NOT valid

1. No proof of intent

An e-signature must demonstrate the signer’s intent to accept the agreement. Typically, this occurs by requiring a signer to take action: 

As long as you can discern a signer’s intent to agree to a contract, an e-signature is enforceable by law. In some states, courts have enforced agreements despite the absence of a typed or drawn signature. In these cases, a text message or email exchange proved the party’s intent to accept the terms. 

2. No dependable party identification

The identity of all the signing parties to an e-transaction must be known. Online tools have different ways to verify this.

  • A loose type of authentication will ask a signer to verify with his or her email address. 
  • Systems with higher security require signers to authenticate to the system first to verify their identity.
  • If you need the utmost security, signers must have digital certificates that link them unambiguously to the signed document. 

Most e-signature solutions depend on current login systems or email. More complex architecture tends to be more expensive.

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3. No document integrity

A document will not be accepted if there is evidence that it was altered after signing. This is crucial in establishing the legal status of any document, whether it is signed by hand or electronically. Remember that once the document signing has taken place, the document should not be changed in any way. 

In more technical terms, to ensure the secure management of e-signatures, some systems adopt an e-signature that’s PKI-based. A PKI or public key infrastructure denotes a system that produces a private and a public key. A document’s signer uses the private key and remains concealed from everybody. In contrast, the public one is shared with parties that need to validate the signature’s authenticity. 

PKI-based e-signatures are also “hashed.” The hash value is a document’s unique fingerprint. Even removing a comma would generate a different hash value, indicating that a change has taken place.  

4. No electronic capture

To ensure validity, the system should offer a means of capturing an electronic symbol, sound, or process logically related to a transaction. This should be used by the party that will sign the document. The creation of an electronic signature record must exist at the time of implementation. It should also reveal the process by which a signer accepted the document. For documents exchanged via email, the exchange will qualify as a transaction record. Most services like Countersign produce audit reports that meet this prerequisite.

5. No disclosure and consent  

Disclosure here refers to informing the signee of the contents of the document. If parties aren’t clearly informed of the planned use of a legally binding e-signature, the document and the signature might be deemed invalid. Consent is another essential factor. They must also be given a choice to opt out before signing the document. 

In most instances, this prerequisite is met by offering a checkbox or appropriate notice. A user should click this before signing. The disclosure information must be available in multiple languages since it applies to agreements between parties in different nations. 

Do NOT sign these documents electronically

Despite their convenience, electronic signatures are not recommended for all documents. Some documents have a higher likelihood of fraud because of a forged or false signature and need additional in-person validations to be legally accepted. E-signatures can not replace the following required validations:

  • additional layer of notarization
  • more identification
  • one or more witnesses
  • thumbprints

Among the “do not use e-signatures” are legal documents:

  • sworn declarations 
  • wills
  • powers of attorney

In a corporate setting, major financial transactions or dealings usually require a notarized document.

E-sign with confidence

E-signatures are as legally binding as conventional or “wet” signatures. Given the above criteria, you can verify if your electronic signature is valid. Remember that some documents still require you to sign them using pen and paper. But for everything else, an online e-signature solution can greatly improve the signature process.

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