An electronic signature (e-signature) is any electronic sound, symbol or process that a person attaches to a document to show they intend to sign it. Typing your name counts, and so does drawing a signature on a screen or clicking “I agree.” US, UK and EU law recognize e-signatures as legally valid for most contracts and business records.
E-signatures differ in how much evidence they carry. A simple e-signature records intent and relies on an audit trail to show who signed and when, while advanced and qualified signatures add identity checks and cryptography that make any later change to the document detectable.
What Is an Electronic Signature?
US and EU law define an electronic signature in almost the same terms. The federal ESIGN Act calls it “an electronic sound, symbol, or process” attached to or logically associated with a record and adopted by a person “with the intent to sign the record.” The EU’s eIDAS Regulation, which the UK kept in its own law after Brexit, defines it as data in electronic form that is attached to or associated with other electronic data and “used by the signatory to sign.”
Neither definition names a technology, and both turn on intent. The signer has to mean the mark as a signature, and if the signature is ever challenged, the record around it, such as an audit trail showing who signed, when and from which device, is what proves that intent.
People often treat “digital signature” as a synonym, but a digital signature is one specific way of creating an electronic signature. It uses a certificate and public-key cryptography to bind the signer to the document, and it is the technology behind advanced and qualified e-signatures.
Types of E-Signatures
There are several types of e-signatures, each serving different security and verification needs:
- Simple Electronic Signatures (SES): These are the simplest form, used for general purposes where legal requirements are minimal. SES can be a typed name, a digitized image of a handwritten signature, or a click on an “I accept” button.
- Advanced Electronic Signatures (AES): Offering a higher level of security, under eIDAS, an AES must be uniquely linked to the signer, capable of identifying them, created with signing data under their sole control, and linked to the document so any later change is detectable.
- Qualified Electronic Signatures (QES): Predominantly used within the EU, QES are the most secure type, requiring a qualified signature creation device and a certificate from an accredited provider. QES have the same legal effect as a handwritten signature in both the EU and the UK.
The Technical Foundation of E-Signatures
E-signatures are based on a framework that ensures the authenticity, integrity, and non-repudiation of digital documents:
- Authentication: The process begins with verifying the identity of the signer. This can be achieved through various means, such as email verification, or more secure methods like digital certificates and biometric verification.
- Data Integrity: Once signed, the document is sealed with a cryptographic hash function. This unique digital fingerprint ensures that any alteration to the document after signing is detectable, maintaining the document’s integrity.
- Non-repudiation: E-signatures are accompanied by digital audit trails, recording the signer’s IP address, device used, and the timestamp of signing. This information gives evidence that makes it hard for a signer to deny they signed.
How E-Signatures Work
The process of creating and using an e-signature involves several steps to ensure security and authenticity:
- Document Preparation: The document to be signed is prepared and uploaded to an e-signature platform. The signer’s details, such as email address and name, are entered.
- Signer Authentication: The signer is authenticated using various methods, depending on the type of e-signature. This could involve SMS verification, email links, or digital certificates.
- Signing: The signer applies their e-signature to the document. This can be done by typing a name, drawing a signature, or clicking to agree to the document’s terms.
- Seal and Secure: The e-signature platform applies a tamper-evident seal, so any change after signing shows up, preventing any further alterations. The platform also generates a detailed audit trail, documenting every step of the signing process.
- Verification: Recipients can verify the e-signature’s validity through the e-signature platform, confirming the document has not changed since it was signed.
Are E-Signatures Legally Binding in the US, UK and EU?
E-signatures are legally binding in the US, the UK and the EU for most contracts and business records. In all three, a signature cannot be rejected simply because it is electronic, though each keeps a short list of documents where stricter formalities still apply.
United States
The federal ESIGN Act of 2000 says a signature or contract in interstate or foreign commerce “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” At state level, every state except New York has adopted the Uniform Electronic Transactions Act (UETA), and New York gives e-signatures the same standing through its own Electronic Signatures and Records Act. ESIGN excludes wills and testamentary trusts, adoption and divorce matters, court documents, and certain consumer notices such as foreclosure and eviction notices.
European Union
The eIDAS Regulation (EU) No 910/2014 applies directly in every member state. Under Article 25, an electronic signature cannot be denied legal effect or refused as evidence just because it is electronic or falls short of the qualified level, and a qualified electronic signature has the same legal effect as a handwritten one. In practice, the level you choose comes down to how much evidence you may need later: a simple e-signature is valid, but an AES or QES is much easier to defend if a signature is disputed.
eIDAS 2, in force since 20 May 2024, adds the EU Digital Identity Wallet. Member states must offer one by the end of 2026, and people will be able to use it to create qualified signatures on their phone.
United Kingdom
Section 7 of the Electronic Communications Act 2000 makes electronic signatures admissible as evidence of a document’s authenticity and integrity. UK eIDAS, the version of the EU regulation kept after Brexit, adds the same Article 25 protections, including handwritten-equivalent status for qualified signatures. In 2019 the Law Commission confirmed that an e-signature can execute a document, including a deed, as long as the signer intends to authenticate it and any required formalities, such as witnessing, are met.
A few documents, such as wills, still usually need a handwritten signature. The rules on when a wet signature is still required differ between the US, UK and EU.
Creating Your First E-Signature
Creating an e-signature is straightforward with platforms like Folderit. Here’s a simple guide:
- Choose Your Platform: Select an e-signature platform that meets your security needs and legal requirements.
- Upload Your Document: Upload the document you need to sign to the platform.
- Authenticate: Verify your identity as required by the platform, which may involve a simple login or a more secure verification process.
- Sign: Apply your e-signature using the platform’s tools—type, draw, or upload an image of your signature.
- Save and Send: Save the signed document and share it with the necessary parties directly through the platform.
Folderit’s eSign Solution
Folderit builds electronic signing into its document management system, so a contract or policy is signed in the same place it is drafted, approved, versioned and stored. When an auditor or a counterparty asks for evidence, the signed file, its earlier versions, the approvals that came before it and the audit trail are already in one place, instead of being split between a signing tool and a shared drive.
Folderit has three ways to sign, depending on how much assurance a document needs:
- Folderit eSign, the native method, for internal users and external signers invited by email, with unlimited signatures and a choice of sequential or parallel signing order.
- DocuSign, for teams that already use it, through Folderit’s DocuSign integration.
- eID qualified electronic signatures, made with a government-issued ID card in 25 European countries, or with Smart-ID in Estonia, Latvia and Lithuania and Mobile-ID in Estonia and Latvia.
To sign with Folderit eSign, you open the document, start an eSign workflow and add each signer’s email address. Folderit then records every view and signature in the document’s history. The guide to signing documents online with Folderit eSign walks through each step with examples.
Conclusion
E-signatures represent a pivotal technology in the digital transformation of businesses, offering a blend of efficiency, security, and legal compliance. By understanding how e-signatures work and leveraging solutions like Folderit eSign, organizations can streamline their document signing processes, ensuring they remain competitive in the rapidly evolving digital landscape.
Electronic Signatures: FAQs
Is a typed name a legally valid electronic signature?
Yes, in most cases. US, UK and EU law all accept a typed name as an electronic signature when the person typing it intends to sign. Its weakness is evidence: a typed name is far easier to defend when an audit trail records who typed it, when it was typed and from which account.
Which type of e-signature does a business document need?
A simple e-signature backed by an audit trail covers most contracts, HR forms and internal approvals. For agreements where proving the signer’s identity matters, such as high-value supplier contracts, an advanced signature is the safer choice. Use a qualified signature when a document needs handwritten-equivalent status in the EU or UK, or when a regulation asks for one.
How can you check whether an electronic signature is valid?
Open the signed document in the platform that created it, or check advanced and qualified signatures in a signature validation tool. A valid signature shows who signed and when, and confirms the document has not changed since. For a simple e-signature the audit trail is the evidence, so check that it records every signer’s actions.
