If two parties need to draw up some form of contract or agreement with each other, the universally accepted method has generally been a signature – a real-life signature, that is. However, with recent technological developments and changes, digital and electronic signatures have become far more widely used.
If you’re wondering exactly what an electronic or digital signature is, and what differences (if any) there are between the two, the following guide will explain each concept and compare the two.
An electronic signature is basically the computerised equivalent of a real-life signature. It is a unique identifier that verifies a person’s agreement to the terms of a particular contract or document.
However, it isn’t necessarily a handwritten name like a physical signature. An electronic signature consists of symbols or other data that provide verification of a person’s intent to sign a document.
The term ‘electronic signature’ can also be used to refer to more literal means of digitising a signature, such as using a stylus to write your name on the screen of a tablet or other device, or even simply signing a regular piece of paper and scanning the document into a digital version.
All of the above methods do present a certain level of risk when it comes to genuine verification of a person’s intent to sign a document. But that’s where digital signatures come in.
On the surface, a digital signature might sound like the same thing as an electronic signature. But in fact, they’re two completely different things. Where an electronic signature may refer to any of the different elements discussed above, a digital signature is a specific type of signature that can be linked to encrypted information to verify someone’s identity.
Basically, a digital signature is something like a digital fingerprint or ‘identity’. It’s much more secure and specific than an electronic signature in that regard.
So, how does digital signature technology work?
To start with, every digital signature uses a standard format called Public Key Infrastructure (PKI). A signature in this format must be generated by a special digital signature program, which will create two ‘keys’: a public and private key.
The private key is unique to each user, and a public key is generated whenever a digitally signed document is sent. When the recipient retrieves the message, the public and private keys must match up. If they don’t, it means the document has been altered or the signature isn’t right, and the document is rendered invalid.
Can you have one without the other?
Essentially, a lot of different things can fall under the umbrella of an electronic signature, and it can stand on its own in that regard. But a digital signature is different. Let’s look at it this way: a digital signature is essentially something that supports an electronic signature and makes it secure and valid.
You can have an electronic signature without the encryption elements of a digital signature – but in reality, this isn’t a completely verifiable option. A digital signature is, because it uses an electronic signature while validating it at the same time.
In short, the safest, most secure way to sign documents online is with a full digital signature.
Are electronic and digital signatures legally binding?
In general, the answer to this question is yes. Nowadays, it’s universally agreed that a document cannot be denied legal enforceability solely because it is in electronic form. Electronic and digital signatures carry the same legal weight as paper documents with physical signatures.
However, there are certain rules and regulations depending on where in the world you are. Current NSW legislation, for example, only recognises digital and e-signatures if both parties to the contract have consented to the use of such signatures, and if the method used for signing is deemed entirely reliable.
Hopefully, you now understand the subtle differences between the terms ‘electronic signature’ and ‘digital signature’. These are concepts that anyone involved in business, big or small, should be familiar with.
As we move further and further into the digital age, physical documents and signatures may slowly become a thing of the past – and when they do, you’ll need to understand the full legalities of signatures in both their electronic and digital forms.