Your signature is required! You might be certifying that you’ve accepted the terms of a agreement, applying for a passport or giving your child permission to go on a field trip. Chances are you won’t be appearing in person, putting pen to paper and signing with a flourish. This blog post will explain when this type of signature is necessary, explore the types of electronic signatures that can replace it and explain when each one is used.
Table of Contents
1. What is a wet signature?2. The limitations of wet signatures
3. What is an electronic signature?
4. Are an electronic and digital signature the same?
5. The 3 types of electronic signatures
5.1 What is a simple signature?
5.2 What is an advanced signature?
5.3 What is a qualified signature?
6. US laws governing the use of electronic signatures
7. How e-signatures can be combined with automated workflows
8. Benefits of using electronic signature
What is a wet signature?
To "wet-sign" a document, you use a pen on an actual piece of paper. The term "wet" refers to ink on paper needing time to dry. Throughout history, people have also used various methods such as stamps, personal seals, or thumbprints to create the equivalent of a wet signature. This type of signature was once viewed as the standard way to sign legal documents. Wet signatures were thought to offer more assurance that the contract or agreement would be completed and processed since signers are there in person.
While electronic signatures are accepted as legally valid in most cases, there are still certain situations including wills, trusts, adoptions and divorce proceedings, where wet signatures are required. In addition, in the US, a wet signature is required for notarized signatures when they’re done in-person with witnesses who confirm its validity. However, during the recent Covid pandemic many people were unable to acquire notarizations in person. In response, several states enacted legislation to allow for online notarization.
A wet signature can be scanned and emailed in electronic format. However, it requires security measures like a unique password and encryption during transmission to prove its integrity. In many jurisdictions, scanned wet signatures hold legal recognition when you take these security measures.
The limitations of wet signatures
In business, using wet signatures for approvals, contracts and agreements is time consuming and expensive.
The issues associated with wet signatures are:
- All signers must be gathered in one place, or the document must be mailed or sent as an attachment in an email
- They pose a security risk because they can be easily forged or altered
- If they’re left on someone’s desk so they can be accessed by unauthorized personnel
- There’s no visibility into the process to see whether the document has been received and signed
- Documents signed on paper can be lost, misfiled or destroyed by a natural or human-made disaster
- Paper documents are not searchable
- Storing physical documents requires office space or off-site storage
What is an electronic signature?
Electronic signature is a general term that describes any signature that is electronically transmitted, whether it's written in person on a tablet, indicated by checking a box, delivered via a password protected stamp or provided by a service like DocuWare technology partners DocuSign or Validated ID that are also Trust Service Providers (TSP).
Electronic signatures can use a digital image, symbol or arithmetic key. They are characterized as simple, advanced and qualified. Simple signatures are used when security and confirmation of the identity of the signer are not a priority.
Advanced and qualified signatures are used when you need to prove that the individual providing the signature consents to the conditions that are outlined in the document they are signing, validate the authenticity of a document and confirm the identity of the signer. Besides offering security, and easy storage and retrieval, electronic signatures permit people to sign remotely, provided they have access to the web.
Are an electronic signature and a digital signature the same?
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A digital signature is a type of electronic signature. While the terms may be used interchangeably, this is misleading. Digital signatures use complex algorithms, public and private digital keys and certificates which are overseen by TSPs to authenticate the identity of the signer and ensure the integrity of the document.
The 3 types of electronic signatures
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Electronic signatures are categorized as simple, advance and qualified. The most important difference between them is the level of security each one offers.
What is a simple signature?
The typed name under an email, checking a box on a web form or signing for a delivery on a mobile device are examples of a simple signature. With a simple signature, there is no proof of who signed the document. It’s enough to know the signer’s email address or that they received a unique access code before signing. Other authentication techniques include using a corporate ID, password or a PIN sent to an email address or mobile phone. For example, a signature stamp may be password protected so that only the authorized signatory can use it.
Simple signatures are ideal for internal approvals and authorizations. For example, when an HR specialist authorizes an employee's vacation time or approval of an invoice or purchase order. You can also use them for budget or expense approvals or for situations like signing up for a company outing, confirming that an employee has read the employee handbook and keeping track of internal certifications.
Simple signatures don’t always require the creation of additional data to verify identity and authenticity. They’re informal and used when there is a minor risk of their legal validity being challenged.
What is an advanced signature?
An advanced signature is encrypted by the sender’s private key which is provided by a qualified TSP. Data in the key is coded so only the designated individual can sign the document. The signature is also marked with the time that the document was signed. The original file and the digital signature are sent to the recipient.
Two-factor authentication of the signatory (such as response to an email or text) is sufficient for validation of an advanced signature. Biometric signatures, which can be used for in-person signing or at a kiosk, are also in the advanced category.
An advanced signature is widely used for commercial contracts in the B2B sector. This signature type offers a moderate level of documentary proof.
What is a qualified signature?
With a qualified signature, in addition to encryption of the key, the identity of the signer is confirmed by a certificate deposited with a TSP. This type of e-signature ensures that the document has not been manipulated because the digital certificate authenticates the signer’s identity. The qualified certificates are stored by the TSP and can be retrieved at any time.
This multi-factor authentication process creates an audit trail attached to every qualified electronic signature. The signed document and a record of the transaction must be archived and that’s one of the ways a document management system can help. With some exceptions, a qualified signature is considered equivalent to a handwritten signature and offers the highest level of documentary proof.
The qualified signature has full legal value and guarantees the enforceability of a document. It can be used to electronically sign any contract, document or transaction such as labor and commercial contracts, bank contracts, updating bank details and insurance policies.
US laws governing the use of electronic signatures
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The Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (E-Sign) regulate the use of electronic signatures in the US. Both the UETA and the E-Sign act apply to business transactions, commercial contracts, and government affairs. The E-Sign act also provides guidelines for foreign and interstate transactions. It states that no contract, signature, or record shall be denied legal effect solely because it is in electronic form.
According to the E-Sign Act electronic signatures are legally valid if there is:
- A clear intent to sign by each party
- Consent to do business electronically
- A signature associated with the record and not stored separately
- A record that is archived and available to all signers
- An opt-out clause that enables the signers to request a paper contract
The act also confirms that a wet signature may be required for:
- State and family law matters
- Court orders, pleadings, motions, and other court documents
- Notices of foreclosure, eviction, or repossession
- Cancellation notices, such as utilities or insurance benefits
- Safety recall notices
How electronic signatures can be combined with eforms and automated workflows
Automated workflows created within a document management system provide a structured process to manage documents that require signatures along with the benefits of transparency, identity verification and strong security.
You set up precise rules for the handling of the document to be signed and define the triggers that launch a workflow, such as closing a sale, onboarding a new customer or a contract renewal date. Every in-house participant can view the progress of the signature process and find out which steps are complete, and which are outstanding.
The capabilities of a TSP such as Validated ID or DocuSign can be integrated seamlessly into a document management workflow when an advanced or qualified signature is needed.
Benefits of using electronic signatures
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Electronic signature capabilities should be part of every effort to digitize and improve processes.
Their advantages include:
- Improved security that reduces the risk of forgery or tampering and creates secure electronic records
- Quicker collection of signatures to speed contract management, internal administration and customer, partner and vendor communication
- Automated data capture and the creation of an audit trail for each document
- The ability to review, sign, and return documents from almost any device, at any time
- Improved recordkeeping though more efficient tracking, auditing, storage and retrieval
- Savings on paper, postage, time and other resources
Electronic signatures powered by DocuWare
- Transfer signed advanced and qualified documents automatically between the document management system, the TSP and the signers
- Take full advantage of electronic signature technology by improving remote processes, enhancing security and streamlining compliance
- Notify stakeholders by email when a document is available for signing
- Enable version control to make sure you have the final signed document on file
- Use simple signatures along with eforms when proving the signer’s identity is not critical
- Collect e-signatures for a document from all relevant signatories from one workflow
- Deliver contracts to signers within minutes to minimize delays
- Save the signed document in an audit-proof manner in the document repository
