Although often used interchangeably, there are key differences between electronic signatures and digital signatures.
What is the difference?
An electronic signature or "e-signature" is an umbrella term used for any mark made by electronic means, or made in an electronic medium, which shows agreement by the signatory.1 These can take numerous forms such as a picture/bitmap scan of your ink signature, an emoji, a sound, typing your name or initials in the allotted signature slot of a document, or drawing your unique mark on a document with a mouse or stylus. 23
A digital signature is a specific type of electronic signature. It uses digital certificates and public key infrastructure (PKI) to encrypt documents and make them more secure.
The European Union's eIDAS regulation classifies e-signatures into three primary types:
- Simple Electronic Signatures (SES): these represent the most basic level of e-signature. They generally have no identity verification or encryption and cannot ensure the integrity or authenticity of a document (e.g. scanned signature, ticking a checkbox to confirm agreement to a website's terms and conditions);
- Advanced Electronic Signatures (AES): these have additional verification features to confirm the identity of the signatory. They guarantee the authenticity and integrity of a signed document by incorporating additional security protocols including digital certificates and PKIs; and
- Qualified Electronic Signatures (QES): these provide the highest level of security for electronic signatures. In addition to the security protocols of an AES, a QES requires a qualified signature creation device (QSCD) that generates signatures with a qualified certificate. These can only be provided by duly certified entities. Due to the higher level of security, QES is usually the industry standard and/or regulatory requirement for highly regulated uses such as financial transactions. 45
Are E-signature signatures legally binding?
The number one question when it comes to e-signatures is: "Does it make my document legally binding?"
UNITED KINGDOM
The UK's Electronic Communications Act 2000 recognized the admissibility of electronic signatures in legal proceedings.6
In Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd (2012) EWCA Civ 265, when deciding whether a contract of guarantee was in existence and whether it had been breached, the UK Court of Appeal held that an email signature at the end of a series of emails was sufficient and legally binding. In the court's opinion, the sender had put his name on the email to indicate that it came with his authority and that he took responsibility for the contents.
By contrast, in Mehta v J Pereira Fernandes S.A (2006) EWHC 813 (Ch), the High Court held that the sender's e-mail address, which had been automatically inserted and was separate from the body of the email, was not included with the intent to be a signature. In his judgment, Judge Pelling QC stated:
"In my view, it is not possible to hold that the automatic insertion of an e-mail address is, to use Cave J's language, "... intended for a signature..."
This made it evident that the British courts were looking beyond a mere mark or indication of identity, and instead, sought an intention to create a legal relationship.
The UK subsequently adopted the eIDAS Regulation which validates the general enforceability and admissibility of all kinds of e-signatures unless otherwise specified by law.7 However, some specific documents, for instance, transfers, leases and any other deeds that have to be registered at the Land Registry or Companies Registry still require wet ink signatures.8
UNITED STATES
In the US, the Electronic Signatures in Global and National Commerce (ESIGN) Act and the Uniform Electronic Transactions Act (UETA) ensure that electronic signatures have the same legal standing as traditional, wet signatures. This position dates as far back as 1996 and was established in the case of ProCD, Inc. v. Zeidenberg (1996) 86 F.3d 1447, 39 U.S.P.Q.2d 1161, 1 ILRD 634 (7th Cir.)
SOUTH AFRICA
South Africa generally accepts the legality of e-signatures under the Electronic Communications and Transactions Act (ECTA) but in certain instances, such as in intellectual property licensing and intellectual property transfers, requires an advanced electronic signature (AES) – a digital signature with a certificate, or a wet signature.
GHANA
In Ghana, the Electronic Transactions Act, 2008 (Act 772) (the ETA) defines a digital signature as data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature.9
The ETA recognizes digital signatures as legally binding provided:
- the means of creating the signature is attributed to the signatory alone;
- the means of creating the signature is controlled by the signatory without any duress or undue influence; and
- it is possible to detect if any alteration is made to the signature after signing. 1011
The ETA also specifies that the rules around digital signatures will not apply to:
- negotiable instruments as defined in the Bill of Exchange Act, 1961 (Act 55);
- the grant of a power-of-attorney under the Powers of Attorney Act, 1998 (Act 549);
- a trust as defined in the Trustees Incorporation Act, 1962 (Act 106);
- a will as defined in the Wills Act, 1971 (Act 360);
- Contract for the sale or conveyance of immovable property or any interest in the immovable property;
- bills of lading;
- documents required for the registration of a company, partnership or sole proprietorship;
- the swearing of affidavits or statutory declarations before a Commissioner for Oaths or Notary Public; and
- any class of documents or transactions that may be notified by Gazette, and therefore, any of these documents executed using digital signatures will not be binding.12
The language of the ETA is restricted to digital signatures, which from the discussion above, leaves the legal status of the broader category of e-signatures in question.
According to Section 12 of the ETA, either personal digital signatures or "any other recognized, secure and verifiable mode of signing agreed by the parties or recognized by the industry to be safe, reliable and acceptable" will be legally valid.
Following the common law and global developments regarding e-signatures, it can be argued that e-signatures are "recognized by the industry as safe, reliable and acceptable", and thus satisfy the requirement.
In agreements where basic electronic signatures are used, contracting parties may want to include a clause that states that their electronic signatures should be given the same legal force and effect as a handwritten signature. This evinces the parties' agreement and intention to be legally bound which may be key in deciding the enforceability of the agreement.
It must however be noted that e-signatures will not be binding under any of the circumstances where an ink signature will not be binding. i.e. where fraud, misrepresentation, undue influence, or mistake has occurred.
Conclusion
Though often used interchangeably, digital signatures are distinct from electronic signatures. Digital signatures, because of their encryption and authentication features, have become the preferred option. But, given the rapid progression of technology, there is a growing acceptance of the legality of e-signatures in the different forms they come, as they are quick, more accessible and convenient to use.
The criteria for determining when e-signatures or digital signatures may be deemed insufficient varies across jurisdictions. Nevertheless, the consensus appears to be that both digital and electronic signatures are legally binding unless expressly precluded.
Footnotes
1 California State University Channel Islands (2020) Electronic and Digital Signature Authorization. Available at: https://www.csuci.edu/its/adobesign/electronic-and-digital-signature-authorization.htm (Accessed: 10 July 2023).
2 Ibid.,
3 The Guardian (2023) Canadian Judge Rules Thumbs-Up Emoji Can Represent Contract Agreement. Available at: https://amp.theguardian.com/world/2023/jul/06/canada-judge-thumbs-up-emoji-sign-contract (Accessed: 7 July 2023).
4(EU) No 910/2014 (the eIDAS Regulation) creates a single framework for electronic identification (eID) and trust services for secure cross-border electronic transactions.
5 Electronic Identification (2022) Difference Between Advanced And Qualified Electronic Signatures. (2022) Available at: https://www.electronicid.eu/en/blog/post/difference-advanced-qualified-electronic-signatures/en (Accessed 7 July 2023).
6 Section 7 of the Electronic Communications Act, 2000
7https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2014.257.01.0073.01.ENG
8 The Law Society (2019) Signing and Exchanging Documents. Available at: https://www.lawsociety.org.uk/topics/business-management/signing-and-exchanging-documents (Accessed on 11 July 2023)
9 Ibid., section 144
10 Section 10 (1) of the Electronic Transactions Act, 2008 (Act 772)
11 Ibid., section 10 (2)
12 Ibid., section 4
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
