Signatures – A Short Introduction
A signature is a handwritten (and frequently stylized) representation of a person’s name, nickname, or even a simple “X” or another mark that is written on documents as confirmation of identification and purpose.
At its core, a signature is an indicator of consent to certain conditions or terms, usually being the terms of a contract. To fulfill this function, signatures need to be both unique and verifiable. These key criteria have directed the evolution of signatures through the decades.
Following the development of cryptographic schemes, signatures have taken numerous forms, the latest being the electronic or digital version of signatures, i.e E-Signatures which also come in various types.
Types of Signatures
In the corporate world, there are four main sorts of signatures, and their definitions are frequently misunderstood or ambiguous.
Here are the main types of signatures popular among businesses:
- Written Signatures:
Any physical mark made by a person on paperwork. Most of the time, it’s writing your name in cursive on a piece of paper, document, or contract, with initials on each page showing the scope of what you’re signing.
- Click Wrap Signatures:
This is primarily used for online purchases, where a simple check in a box signifies approval of the terms and conditions outlined on the website. Before the services may be used, the user must first click the box.
- Electronic Signatures (E-Signatures):
An electronic form of a wet signature, for which several nations have specified the legality and description of usage. These are the most popular types of signatures used by businesses around the world.
- Digital Signatures:
A digital signature is a type of authentication that allows a code to be added to a document as a signature. It is granted by a certifying agency and is required for certain specified agreements.
Difference Between Digital Signatures and Electronic Signatures
A digital signature is cryptographically safe and proves that the document has been seen and authorized by someone with your private signing key (in other words, you). It’s safe, but it’s also difficult.
In contrast, an electronic signature is simply an image of your signature put on top of a PDF document. It’s possible to do it with a variety of apps, and it’s what most people expect when they send you a paper to sign. They won’t know what to make of a PDF file with a digital signature if you send it to them. Accepting signed documents via email rather than faxing them is a major technological leap for many firms.
Legal Validity of eSignatures In India
The legal validity of eSignatures in India is determined by the IT Act, 2000 and in part by the Indian Contract Act.
According to the IT Act, the signer must get a Digital Signature Certificate (DSC) from a Certifying Authority (CA) licensed by the Controller of Certifying Authorities (CCA) in order to create electronic signatures.
The identity and address of the signer must be confirmed before a CA issues a DSC. The secret key used to create the electronic signature is kept in a one-time-use hardware cryptographic token.
The Indian Contract Act determines what constitutes a legally enforceable contract and how eSignatures fit into the contract execution process.
This existing approach of in-person physical presence, identity, and address verification using paper documents, and the issue of hardware cryptographic tokens does not scale to a billion individuals. Digital signature usage must be widespread in order to provide entirely paperless citizen services.
What makes an eSignature legally valid?
According to the IT Act, e-signatures must meet five conditions in order to be valid:
- E-signatures must be linked to the individual who signed the document in a unique way. This criterion is usually addressed by issuing a digital ID that is based on a digital certificate.
- The signer must have complete control over the data used to generate the e-signature at the time of signing. To meet this criterion, most online e-signature service providers allow signers to directly affix their e-signature to the document.
- Any change to the attached e-signature or the document to which it is attached must be traceable. This is accomplished by encrypting the document and sealing it with a tamper-evident seal.
- An audit trail detailing the processes followed throughout the signing process should be available.
- A Certifying Authority (CA) recognized by the Controller of Certifying Authorities (CCA) appointed under the IT Act must issue the digital signature certificate.
Types of eSignatures Under the IT Act
Two types of signatures are recognized by the IT Act:
- E-signatures that include both an Aadhaar and an eKYC service
Users possessing an Aadhaar ID, the unique identity number supplied by the Indian government to all Indian residents, are free to sign documents securely online using an online e-signature service. In this example, an Application Service Provider (ASP) interacts with an online e-signature service to give users a mobile or web app interface with which they can engage.
- Digital signatures created by a hash function and an asymmetric cryptosystem
A secure pair of keys, a private key, and a public key is referred to as an asymmetric cryptosystem. Both are specific to each user and can be used to validate and establish an electronic signature.
In this situation, users get a digital signature in the form of a digital certificate from a reputable Certifying Authority (CA). The user’s name, public key, certificate expiration date, and other necessary information about the user are often included in these certificates.
Most operating systems and browsers keep a list of trusted CA root certificates that can be used to authenticate digital certificates issued by a CA.
Why eSignatures?
Electronically signing papers saves time, eliminates the need for paper-based processes, and allows you to sign documents from nearly anywhere, on practically any device. One requires eSignature as it helps in:
- Workflows are accelerated
- Transactions are executed securely
- Manual signatures are eliminated
In 2019, it was reported that eSignatures are becoming more popular. In just five years, the number of global eSignature transactions has risen from 89 million to 754 million.
Electronic Signatures: Who Should Use Them?
Financial Institutions
On a daily basis, banks, NBFCs, and financial institutions handle millions of documents such as agreements, consent forms, mandate forms, and sanction letters.
Insurance Companies
With an electronic signature system and an automated eSign procedure, insurers may swiftly prepare policy documents and eSign insurance documents.
FMCG & Retail
To stay profitable, businesses in the FMCG industry need to be quick and efficient. Vendor contracts must be written rapidly, communicated to vendors quickly, and signed even faster.
Legal Firms
Legal enterprises, more than any other industry, are hampered by paper documents. Any legal professional’s bread and butter is documentation, and businesses spend days creating, negotiating, and executing legal documents.
Healthcare Institutions
Healthcare organizations can automate the majority of their documentation with eSign and customized eSign procedures, allowing them to spend more time treating patients.
Which Documents Can Be eSigned?
In practically every country on the planet, electronic signatures are legally binding in most business and personal transactions. This blog has further information.
Electronic signatures can be used to sign a wide range of documents, including:
- Offer letters: An offer letter is a letter sent by a firm to a potential employee that outlines the major terms of their employment.
- Sales contracts: A sales contract is a legal agreement between a buyer and a seller to purchase assets for a specified amount of money.
- Permission slips: A permission slip is a form that a school or other organization sends home with a kid and asks the parent to sign allowing minors to travel under the school’s or organization’s auspices for an event such as a field trip.
- Rental/lease agreements: A rental agreement is a documented rental contract between a property owner and a tenant who wishes to have temporary possession of the property.
- Liability waivers: A liability waiver is a legal document that a participant in activity signs to accept the risks associated with that activity. By doing so, the corporation is attempting to absolve the business or person responsible for the activity of legal culpability.
- Financial Statements: Financial statements are official records of a business, individual, or other entity’s financial actions and conditions.
The list of documents which may be eSigned has been extended following an amendment of the IT Act (2000).
This amendment was made official in a notification issued by the Ministry of Electronics and Information Technology (MeiTY) on September 26th, 2022.
The following documents can now be eSigned along with the documents mentioned above:
- A cheque, a Demand Promissory Note, or a Bill of Exchange issued in favor of or endorsed by an entity regulated by the Reserve Bank of India (RBI), National Housing Bank (NHB), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA)
- Powers-of-Attorney (PoA) that empowers an entity regulated by the RBI, NHB, SEBI, IRDAI, and PFRDA to act for, on behalf of, and in the name of the person executing them.
- Any contract for the sale or conveyance of immovable property or any interest in such property.
To be legally enforceable, certain documents that require a notarial process or that must be registered with a Registrar or Sub-Registrar can only be signed using handwritten signatures. These are some of them:
- Negotiable instruments pertaining to transactions between individuals
- Powers of attorney between individuals
- Trust deeds
- Wills and any other testamentary disposition
SignDesk’s eSign Solution
SignDesk’s eSign process and document management technology “ink.it” have helped clients minimize contract execution time from days to under 10 minutes.
Signers can sign documents instantaneously and remotely using online eSign and document templates, and our smart management system keeps you on top of all your business paperwork.
The benefits of ink.it is as follows:
- Documents may be created, eSigned, and managed all in one place.
- With eSign, you can streamline your business documentation.
- Use templates to create documents online.
- Sign papers online with eSign, which is a legally binding electronic signature.
- On a smart platform, manage all of your documents online.
eSignatures can be created with SignDesk in the following ways:
- eSign workflow:
By sending an OTP verification to the concerned party’s registered mobile number and email address, it is possible to sign individual documents. Both Aadhaar and electronic signatures employ this OTP-based workflow.
- Signatures based on USB Tokens:
A Digital Signature Certificate (DSC) is placed in a USB Token in this signature, which is a hardware signature. It creates signatures using the PKI (public key infrastructure) and may be accessed via a computer to sign documents in bulk electronically.
SignDesk automates the entire documentation process for enterprises across segments. We provide legally valid templates for instant document creation, electronic signatures with eSign workflow for instant signatures, and digital stamping services for instant legalization.
Our eSign technology enables organizations to go paperless, minimize paperwork expenses, and shorten the time it takes to execute documents by over 50%.