In Short
- UK eIDAS sets the legal framework for electronic signatures, ensuring they carry legal weight when properly executed.
- Three levels of electronic signature offer varying degrees of security, with advanced and qualified signatures providing greater assurance for higher-risk contracts.
- Businesses must assess risks, verify identity, and ensure document integrity when adopting electronic signing methods.
Tips for Businesses
Consider the value and complexity of each contract when choosing the type of electronic signature to use. Use advanced or qualified signatures for higher-risk transactions and ensure your signing platform offers identity verification and audit trails. Include a clear clause in contracts confirming the legal effect of electronic signatures to reduce potential disputes.
Summary
This article explains the UK eIDAS Regulation and its application to electronic signatures, outlining key considerations for businesses in the United Kingdom. Prepared by LegalVision, a commercial law firm specialising in advising clients on electronic contracting and compliance, it highlights the legal and practical aspects of using electronic signatures for secure and enforceable agreements.
On this page
- What is the UK eIDAS Regulation and Its Significance to Businesses?
- Understanding Electronic Signatures
- Preventing Risks When Using Electronic Signatures
- Important Considerations for Electronic Signing
- Using a Standard Electronic Signature Clause
- How Can a Lawyer Support Your Business?
- Key Takeaways
- Frequently Asked Questions
Electronic contracting has become a common way for businesses to negotiate and complete contractual agreements in an increasingly digitised and automated business landscape. As more business interactions take place online and on mobile devices, organisations can often turn to paperless contracting models, although this shift can introduce legal and evidential risks that businesses must manage extremely carefully.
Businesses adopting digital signing tools must understand the legal framework governing electronic signatures and their business implications. The UK eIDAS (electronic identification, authentication and trust services) Regulation works alongside other important legal frameworks that govern the use of electronic signatures and their practical operation.
This article provides a high-level and introductory overview of UK eIDAS in the context of electronic signatures and highlights key legal and practical issues organisations should consider to mitigate risk when using electronic signatures.
What is the UK eIDAS Regulation and Its Significance to Businesses?
Put simply, UK eIDAS sets out rules in respect of electronic signatures, electronic seals, electronic timestamps, electronic registered delivery services, electronic documents and website authentication certificates. In short, UK eIDAS helps confirm that electronic signatures carry legal effect. This law, together with the Electronic Communications Act 2000 and established contract law principles, essentially enables electronic signatures to create binding agreements when the signatory intends to authenticate the document and any necessary formalities are met.
Understanding Electronic Signatures
An electronic signature is any electronic method a person uses to sign a document, where the method is linked to the information being verified. This can include:
- typed names in emails;
- scanned handwritten signatures;
- signatures drawn on digital screens;
- click-to-accept confirmations; and
- cryptographic signatures that verify identity and protect document integrity.
UK eIDAS recognises three assurance levels of electronic signatures.
- Simple Electronic Signature: covers basic actions such as typing a name or adding a signature image.
- Advanced Electronic Signature: provides greater security because it must be uniquely linked to the signer, capable of identifying them, created using data under their sole control and able to indicate if the document changes after signing.
- Qualified Electronic Signature: meets the requirements of an advanced signature and also relies on a qualified certificate and a secure signature creation device.
Intention is key here, as an electronic signature takes legal effect only when the signer intends their action to authenticate the document.
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Preventing Risks When Using Electronic Signatures
When using electronic signatures, it is crucial to consider both the legal and commercial risks and weigh them against the practical and administrative benefits of electronic signing. For routine or low-value contracts, a simple electronic signature may be sufficient. However, for higher-value or higher-risk transactions, it may be appropriate to use an electronic signature method that provides greater certainty about the signatory’s identity and the document’s integrity.
Before adopting any electronic signing process, businesses should conduct appropriate due diligence on the proposed signing platform. They should review matters such as:
- relevant identity-verification methods;
- audit-trail capabilities;
- document-integrity protections; and
- data handling practices.
Important Considerations for Electronic Signing
Even if a document can legally be signed electronically, the circumstances of the transaction or matter may mean that using an electronic signature is difficult or not possible in practice.
For example, some documents must be registered with a public body that only accepts wet-ink signatures. Other factors can also limit the use of electronic signatures, such as:
- restrictions in a company’s constitutional documents;
- uncertainty about the place of execution for regulatory purposes; or
- the need for documents to be recognised by overseas registries or authorities.
If simpler forms of electronic signatures are used that do not provide substantial proof of authenticity, security and evidential issues may also arise. These kinds of considerations may lead parties to use handwritten signatures even where the law allows electronic execution.
Using a Standard Electronic Signature Clause
Businesses can include a contractual clause confirming that the parties agree to sign electronically and that electronic signatures have the same legal effect as handwritten signatures.
This type of clause can help to:
- reinforce the parties’ intention to be bound;
- strengthen evidential clarity; and
- reduce the risk of disputes.
Although the law already states that an electronic signature cannot be denied legal effect or admissibility simply because it is electronic, expressly recording this intention within an agreement can help offer reassurance for all parties.
To ensure clarity, commercial parties may choose to include wording stating that each party agrees to sign the agreement using an electronic signature and acknowledges that this method holds the same weight as a handwritten signature in showing their intention to be bound by the agreement.
How Can a Lawyer Support Your Business?
Electronic signatures are widely recognised and used in the UK. However, the rules governing them can be technical and create risks in certain circumstances.
A commercial lawyer can help your business to:
- understand which documents a business may sign electronically;
- explain the formalities that apply to specific documents;
- recommend appropriate signing methods for different transactions;
- help design compliant electronic-signing processes; and
- navigate regulatory developments and how they may affect your operations.
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Key Takeaways
Under UK eIDAS, electronic signatures are legally effective when the signer intends to authenticate the document. Businesses should understand the legal formalities and risks around electronic signatures and understand when simple or advanced signatures are necessary. Using robust processes, secure systems and strong evidence management can help ensure that electronically signed documents withstand scrutiny.
If you need help in drafting your commercial contracts, LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced commercial contract lawyers help businesses across industries manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Questions
UK eIDAS is the legal framework that (alongside other legal rules) governs electronic signatures and trust services in the UK. It confirms that electronic signatures are valid when used with the intention to authenticate a document and in compliance with formalities.
A commercial lawyer can help your business to understand and choose appropriate signature methods for your business contracting purposes. This includes understanding when specific formalities apply and making sure your contracting processes comply with legal rules and formalities.
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