What Is an e-Signature?

by Crystal Welch; Updated September 26, 2017

As an increased number of commerce transactions are conducted electronically, so has the use of e-signatures on a worldwide scale. With the use of a debit card, click of a mouse or digital signature pad, someone can become involved in a legally binding contract. E-signatures are a personalized and unique form of identification that allow an individual to conduct commerce electronically in a variety of ways.

Facts

E-signature is the abbreviation for electronic signature. E-signatures are used on an international scale for all levels of e-commerce. E-signatures are unique identifiers. In the United States, the Uniform Electronic Transactions Act of 2000 is the Act which stipulates the conditions and legalities of the e-signature used in commercial (including consumers), governmental and business. According to the UETA, an electronic signature “means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”

History

The origination of the electronic signature began during the Civil War era when Morse code was used to transfer electronic messages and documents via telegraphs. Many times, contract agreement terms were transmitted this way. Fax machines, during the 1980s, were used to transmit legal documents. These electronic documents would contain legally binding signature images, while the original signature was on the hard copy of the original documents. Electronic signatures became prominent in commerce transactions with the implementation of the UETA in 2000 in the United States. Other similar legislations have been enacted worldwide.

Uses

Electronic signatures have been found to be legally binding when an individual enters into a transaction by using their Personal Identification Numbers (PIN) at financial institutions and online businesses, performing background checks, using ATM machines and through agreements entered into via email. Point of sale transactions involving the individual signing a debit or credit card transaction, while using a digitalized pen are another form of electronic signature. Other areas where e-signatures are used involve contracts entered into strictly online. By agreeing with terms and conditions, clicking on “I Agree” - this constitutes a legally binding e-signature.

Benefits

Electronic signatures facilitate commerce by providing both parties to the transactions with benefits ranging from ease of use, convenience, versatility of modality used (such as online, email or debit cards) and involves an increased rate of transaction processing. Involved parties also benefit, since e-signatures promote a paperless society, which in turn, reduces clutter and requires less real-world storage space. This is in compliance with the green living philosophy. If not printed on paper, electronic transactions can be stored electronically in a file folder. The file could be stored on a CD instead of in a storage box.

Considerations

One needs to be concerned about identity theft in the electronic commerce world. PINs and electronic signatures have been stolen to benefit the thief and harm the innocent. Maintaining tight control over debit and credit cards, and not giving out one's PIN is imperative. Also, do not perform transactions on unsecured websites to prevent personal information from being stolen. Also, it is important to realize that documents containing electronic signatures are admissible in courts of laws as evidence. They can be used for audits, civil and criminal investigations, and legal proceedings, as needed. As Section 13 of the UETA states, “evidence of a record or signature may not be excluded solely because it is in electronic form.”

References

About the Author

Crystal Welch has a 30-year writing history. Her more than 2,000 published works have been included in the health and fitness-related Wellness Directory, Earthdance Press and Higher Source. She is an award-winning writer who teaches whole foods cooking and has written a cookbook series. She operates an HON-code-certified health-related blog with more than 95,000 readers. Welch has a B.B.A. from Eastern Michigan University.