Are E-Signatures Legal?
It’s the million dollar question, right? We see them every day, whether we’re signing off on a package delivery, a digital contract for our business, or simply our to-go coffee order.
Using e-signatures, especially with your contracts as an online business owner, is super handy. You want to make it as easy as possible for your clients to sign your contract and return it back to you so you can start working together ASAP, and e-signatures do just that.
They are the fastest route because they take out the steps of having to mail the contract to the other party (or have the other party print it out), cross your fingers and hope they remember to sign it and mail (or scan and email) it back, all while trusting that it doesn’t get lost or damaged on its journey through the mail or email system.
There’s no doubt that e-signatures make life easier for both parties involved. But the REAL question is… are they legal?
Are E-Signatures Legal?
I’ve got good news for all of you e-signature-loving entrepreneurs…the answer is YES! They are 100% legal. Cue the cheers and sighs of relief! Now, here’s what you need to know about them.
In Canada, we have a specific law that has ensured e-signatures are legal in most situations. (There are still requirements for pen and ink signatures for some estate planning and court documents outside the scope of this discussion, so check with a lawyer about those situations!). Specifically, part 2 of the Personal Information Protection and Electronic Documents Act (PIPEDA) sets out when and how electronic signatures can be used and what actually constitutes a signature.
It doesn’t always have to be what we think of as a typical “signature.” Instead, it can consist of one or more “letters, characters, numbers, or symbols in digital form incorporated into, attached, or associated with an electronic document.”
Each time you check one, you are essentially signing and agreeing to those terms. This is why it’s so important that you implement one of these e-signature checkboxes on your own website, if you have one.
Similarly, in the United States, the Electronic Signatures in Global and National Commerce Act (or E-sign Act) also allows for electronic signatures in most business contractual situations.
What Constitutes a Legal E-Signature?
As with traditional pen and paper handwritten signatures, to be legally enforceable, the party signing has to actually have the intent to sign. There can be no pulling the wool over someone’s eyes to trick them into signing something. Each party who is e-signing needs to have meant to accept the terms of the document on their own free will.
Consent For Electronic Signatures
In order for an e-signature to be legit, it must be clear who the person is signing. The signature should be clearly attributable to the person who made it.
As an online business owner using e-signatures, you should keep solid records. For contracts, each party to the contract should get a copy or have a clear way to access it. I recommend keeping a copy saved on your computer somewhere in the cloud (such as in a safe email folder or digital filing system, such as Dropbox or Google Drive). If you only save a copy on your desktop, you could lose it in the event that your computer crashes or needs reset. Most likely, the online tool you use for sending the document for e-signing will save a signed copy in their platform as well.
Benefits of E-Signatures
While you can certainly accept your client’s written signature on your documents, where e-signatures are allowed, for example, when signing your client contracts, this isn’t any more “legal or enforceable” than a digital signature. Plus, getting a handwritten signature can be a real pain, especially if you work with clients all over the world.
If you haven’t implemented e-signatures into your business, I recommend you do! Electronic or digital signatures also include a time and date stamp, which is a great benefit of using them. That way, there’s no trying to pull a fast one over you by fudging the date it was signed.
Other Benefits: Managing your Client Relationship
Not only are there a ton of benefits to using e-signatures in general, but especially for online service providers.
The types of e-signing tools most often used will provide you with a notification as to whether the other person has opened or reviewed your document yet. This helps you keep tabs on the status of your contract and move your relationship forward effectively.
For example, if you see that your client has opened your service agreement, but has not signed it, you can follow up with them to see if they have any particular hesitations or questions that are keeping them from signing it and take a proactive approach.
You can also track whether or not they’ve just missed it in their inbox by seeing if it’s been viewed or not. If you see that it hasn’t been viewed, you can send a friendly reminder that you’ve sent them the contract and to have them reach out if they have any questions. This also helps move the process along by letting them know that you haven’t forgotten about them and you are keeping an eye on the status of the contract. It’s an extra layer of accountability for them to sign and return so you can get down to business!
Similarly, you’ll often receive a notification when the other person has signed and submitted the agreement. Therefore, you can be sure that you have a signed copy before starting your work together. This is always a good idea, that way you don’t end up onboarding a client and putting in time and work at the risk of not being paid if they haven’t signed the contract yet.
A number of programs and most client management softwares have e-signing as a feature, so I highly recommend looking into them if you are a service provider.
Online Tools For E-Signatures
Since I need to practice what I preach, I personally use Dubsado for my client work in my law firm. I find it’s a great way to not only manage my client work and systematize my business, but to track e-signatures to ensure that my clients have signed my retainer letters before starting the work.
Other tools that offer quality e-signature features include:
- Adobe Sign
- DocuSign (although I find this one quite “legally” and expensive)
Speaking of disclaimers, you can read more about what they are and if you need them in your business here!
Lastly, if you’re thinking to yourself, “All of this sounds great, but I don’t even have a solid contract yet,” then we’ve got you covered with a variety of custom, straightforward contracts for many industries.
Check them out here! All of our client service agreements have the clause you need to collect digital signatures.
*Disclaimer - This post includes an affiliate link for Dubsado. If you sign up through the link, I may receive a commission.