Lothar Determann

Volume 72, Issue 5, 1385-1452

Most professionals favor substance over form. Yet, with respect to form itself, more and more favor electronic form over substantive media and signatures. Companies, consumers, and governments increasingly use electronic communications, documents, and signatures instead of ink and paper. The COVID-19 pandemic has further accelerated an existing shift to digitization. Yet, many remain unsure about the legality or effectiveness of different forms of electronic signatures and find laws on the subject confusing.

Transactions, documents, and signatures are separate concepts. Transactions and other legally relevant actions, decisions, and declarations can be recorded in documents and effectuated with signatures. Documents and signatures can be created or copied electronically or in other formats. Transactions, actions, decisions, and declarations on the other hand exist in the abstract and independent of the electronic or other form in which they may be documented or signed.

In practice, people commonly ask whether electronic signatures are legal. But, the more relevant questions to ask are whether electronic signatures are effective and binding; whether they meet statutory form requirements; whether they protect interests as well as handwritten signatures on paper documents; and whether one is required to create, obtain, or retain paper documents with handwritten signatures in addition to electronic records and signatures. To better answer these and other questions, one has to consult not only newer laws specifically regulating electronic signatures and documents, but also older laws prescribing form requirements. Many older laws do not contemplate modern technologies and therefore do not give clear answers as to whether one can satisfy form requirements electronically.

Numerous different form requirements apply in myriad use cases and jurisdictions with respect to particular transactions, documents, and signatures. Legal and political uncertainties hinder adoption of electronic signature products and global harmonization of applicable laws. Existing laws are complex, confusing, and diverse due to historic factors. As electronic signatures, documents, and records were first adopted more broadly, lawmakers were uncertain regarding the purposes of existing form requirements, how well electronic signatures can address purposes of form requirements, which technologies will be adopted by businesses and consumers, and what legal problems could arise from forgeries. Additionally, lawmakers had reason to be concerned that businesses and consumers would need some time to adapt to new technologies and realize and handle the binding effect of electronically issued declarations. These considerations may have provided a valid excuse in the mid-1990s for somewhat timid, complex, and consciously incomplete and experimental legislation, but twenty years later, they no longer do. It is time for change.

Lawmakers can and should improve electronic signature laws and harmonize them internationally with clearer default rules favoring electronic form; detailed whitelists enumerating transactions that can be concluded with electronic documents and signatures; possibly blacklists specifying additional form requirements for particular use cases; less complex definitions; and clear conflicts of law rules, ideally permissive ones, possibly paired with bilateral or multilateral recognition or adequacy arrangements to drive international harmonization. At the same time, lawmakers should abandon overly prescriptive regulations that require “qualified electronic signatures” certified by nationally licensed providers, because such constructs have not been widely adopted in the last twenty years and seem to stand little chance or need of being adopted going forward.

This Article analyzes the current landscape, applicable legislation, and options for change. Following an introduction, this Article clarifies terms and definitions in Part I, reviews the history and rationale of form requirements outside the electronic sphere in Part II, compares the advantages and disadvantages of electronic signatures and documents in Part III, examines basic approaches for legislation and their potential impact on public and individual interests in Part IV, describes and compares current electronic signature legislation in key jurisdictions in Part V, examines effects of international divergence in Part VI, proposes policy arguments for changes in Part VII, and concludes with a summary.