Electronic Signatures - A Sign of the Times?

When was the last time you signed a document with an actual pen - in ink? If you can’t remember, you’re certainly not alone. An increasing number of contracts are now signed electronically using a variety of online methods, prompting questions as to the legality of these agreements, which have not been confirmed with a “real” signature.

Electronic signatures can be carried out remotely, dispensing with the need for face-to-face meetings meaning a saving of time, travel, potential manpower and administrative costs. Plus, there could also be benefits to the environment with less use of paper and therefore less waste.

There are a number of issues to consider before a business should decide whether electronically signed contracts are best suited to them.

Are Electronic Signatures a Safe Way to Sign Contracts?

The world of corporate and commercial law is held in place by certainty; this certainty is paramount to business transactions. With the Law Commission having confirmed that electronic signatures can be used to sign formal legal contracts, electronic signatures are now, with much more certainty, seen as a safe and legal way for individuals and businesses to sign contracts. This allows for remote transactions, which can hold the same degree of validity as ‘wet’ signatures. With electronic signatures being accepted in statute, the certainty and level of trust in transactions is maintained, whilst simplifying the transactional process.

However, using electronic software to close contracts can be an expensive option. The software will also need constant updates as developments are made by the software developers. Larger businesses may more easily afford this and cover the costs with the savings they make in other areas, but smaller businesses may want to consider this carefully. One further disadvantage is that parties to a transaction may well never meet. This can be seen to be problematic as agreements may be better drafted, or drafted to a more suitable level, if face-to-face meetings occur.


On the plus side, a higher level of security can be guaranteed by using electronic signatures. This is because electronic signatures contain the signature itself, as well as traceable information, such as who signed it, when it was signed and where they signed it. Other advantages are that it isn’t so easy to destroy or lose electronic documents and they can be found more easily online than looking through paper files.

Parties can also opt to receive only electronic copies of such agreements, saving paper, and contributing towards a greener footprint. There are large cost savings owing to this as well because the printing, scanning and sending of documents can be completely eliminated.

Although a ‘wet’ signature is the best first choice, electronic signatures are binding and will be accepted commercially and legally.

Overall, electronic signatures can be seen to be highly beneficial within the business world. The advantages do, on the whole, tend to outweigh the disadvantages, so they are certainly here to stay.