Digital vs Electronic Signatures

In the digital era, the use of electronic and digital signatures has become increasingly prevalent in English commercial contracts.  

While both types of signatures serve the purpose of signing documents electronically, it is important to understand their distinctions and the level of security they offer.  

Electronic Signatures: 

Electronic signatures, as defined under the UK Electronic Communications Act 2000 and the eIDAS Regulation (EU) No 910/2014, can be any electronic sound, symbol, or process attached to or logically associated with a document and executed with the intent to sign it.  

Examples of electronic signatures include: 

• typing a name at the end of an email; 
• clicking an "I accept" button on a website;  
• using a stylus to sign on a touchscreen device.  

While electronic signatures are generally admissible in court as evidence of the signer's intent, their evidentiary weight can vary based on factors such as the method of signature, the security measures in place, and the ability to prove authenticity.  

Electronic signatures are convenient and versatile, making them ideal for low-risk agreements where ease of use is paramount, such as nondisclosure agreements (NDAs) or employment contracts.  

However, their security relies heavily on the surrounding processes and controls, and additional evidence may be required to prove their legitimacy and the signer's intent in legal disputes.  

Digital Signatures: 

Digital signatures are a subset of electronic signatures that use cryptographic technology to provide a higher level of security.  

They involve the use of a unique digital certificate issued by a trusted Certificate Authority (CA) and public key infrastructure (PKI) to encrypt and decrypt the signature.  

Digital signatures are recognised under the eIDAS Regulation as "advanced electronic signatures" or "qualified electronic signatures."  

They have a higher presumption of validity and authenticity in legal proceedings due to their cryptographic basis. 

Digital signatures offer stronger assurance regarding the identity of the signer and the integrity of the document.  

They are preferred for high-value or sensitive transactions where the authenticity and integrity of the document are paramount, such as financial agreements or real estate transactions.  

Digital signatures also ensure compliance with regulatory standards, as they verify the signer's identity and protect against tampering after signing.  

Why are digital signatures generally considered more secure than electronic signatures for English commercial contracts?  

1. Encryption and Authentication:  Digital signatures use cryptographic technology, including public key infrastructure (PKI), to provide a high level of security.  The use of a unique digital certificate issued by a trusted Certificate Authority (CA) authenticates the identity of the signer.  This ensures that the signature is indeed from the person it claims to be. 
2. Integrity: Digital signatures ensure the integrity of the signed document.  If any part of the document is altered after signing, the digital signature will be invalidated.  This provides a robust mechanism to detect tampering and ensures the integrity of the contract. 
3. Legal Recognition and Presumption of Validity: Under the eIDAS Regulation, digital signatures have a higher presumption of validity and authenticity in legal proceedings compared to basic electronic signatures. This means they are more likely to be accepted as evidence without additional proof of their legitimacy. Digital signatures provide stronger evidence in legal disputes, making it difficult for the signer to repudiate the signature.
4. Non-Repudiation: Digital signatures provide non-repudiation, meaning the signer cannot deny having signed the document. The cryptographic evidence and digital certificate link the signature to the signer's identity and the specific document, providing a higher level of assurance.
5. Compliance and Standards: Digital signatures often comply with rigorous standards and regulations, ensuring they meet high-security requirements. Standards such as ISO/IEC 27001 for information security management and FIPS PUB 140-2 for security requirements for cryptographic modules ensure that digital signatures are implemented with robust security measures.

In conclusion, while both electronic and digital signatures are recognised under English law for commercial contracts, digital signatures offer higher security due to their use of encryption, authentication through digital certificates, integrity protection, legal recognition, non-repudiation, and compliance with security standards.  

Electronic signatures, while convenient and versatile, do not inherently provide the same level of security and assurance as digital signatures.  

For English law commercial contracts, it is generally recommended to use digital signatures to ensure the validity and security of the agreements.   

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Note: This publication does not necessarily deal with every important topic nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. The information contained in this document is intended to be for informational purposes and general interest only. 

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