Redesigning signing: Digital signatures vs. Electronic signatures

Since COVID-19 forced many people to work from home, we have seen an unprecedented increase in the number of queries regarding electronic execution. As a result, many organisations are currently reviewing their signing process to adapt to this environment.

If your organisation is transitioning to (or increasing) the use of e-signatures, it is important to have a robust framework or policy in place. It is also important to have an understanding of the relevant technology being used, the categories of documents where care needs to be taken, and any associated legal risks – so that you are best placed to mitigate those risks.

In that respect, digital signatures are preferable to electronic signatures.

What's the difference between an electronic signature and a digital signature?

Electronic signatures are a visible representation of a person’s name (or mark) placed by the signatory (or by another person on behalf of the signatory) into an electronic document or communication. Examples include:

• typing your name into an email;
• signing a PDF on a screen with a stylus; or
• cutting and pasting a picture of your signature into a document.

Digital signatures are a subset of electronic signatures.

A digital signature is a way of signing an electronic document using cryptographic technology and private key verification to authenticate the identity of the signatory and secure the document's contents.

There are a number of digital signing platforms available - Lander & Rogers uses DocuSign. The benefit of using a digital signing platform is that the platform can document:

• the time a signatory opened the document;
• the time a signatory signed the document; and
• the IP address of the device the signatory used to sign the document (and associated location).

In addition, "two factor authentication" (2FA) can be incorporated into the signing flow. 2FA acts to "double check" that the signatory is really the person they are claiming to be, and is often used by banks or for social media organisations. Examples of 2FA that can be incorporated into a DocuSign execution process include providing a separate password either by text message to a signatory's mobile, or verbally over the phone to a signatory.

Why use a digital signing platform?

If an agreement or contract needs to be enforced, the party seeking to enforce the agreement will need to establish that the counterparty intended to be bound by the agreement. A party's signature is usually the best (and most readily available) evidence to establish this. But what if a party claims they did not sign the agreement, or intend to be bound by the document?

Digital signing platforms provide more oversight into an execution process, and more extrinsic evidence which can help establish that a document was in fact signed by the signatory, which is not available when a document is signed with "wet-ink" or less robust electronic signature processes.