What is an Electronic Signature & How it Works: A Full Overview
- Last Updated: Mar 13, 2025
- 15 min read
- Sirion
intro
Businesses and individuals are moving away from traditional paper-based agreements and embracing electronic signatures. But what is an electronic signature, and how does it compare to a wet signature? This comprehensive guide will explore electronic signatures, their benefits, legal aspects, and how they integrate with modern contract lifecycle management systems like Sirion.
What is an Electronic Signature? Understanding the Basics
At its core, an electronic signature (or e-signature) is a digital representation of a person’s intent to sign a document. Unlike a wet signature, which requires physical ink on paper, an e-signature leverages electronic methods to authenticate and execute agreements seamlessly.
What Qualifies as an Electronic Signature?
An electronic signature can take many forms, including:
- Typed Signatures: Entering a name in a digital document.
- Click-to-Sign: Clicking a checkbox or button to indicate consent.
- Handwritten Digital Signatures: Drawing a signature using a touchscreen or stylus.
- Cryptographic Digital Signatures: Using encryption-based authentication to ensure security and validity.
Types of Electronic Signature
Electronic signatures (e-signatures) come in different forms, each varying in complexity and security. Understanding these types can help businesses and individuals choose the right method for their specific needs. Below are the main categories of electronic signatures:
1. Simple Electronic Signatures (SES)
Simple electronic signatures are the most basic type and can include:
- Typing your name at the end of an email.
- Clicking an “I Agree” checkbox on a website.
- Signing with a stylus on a touchscreen.
Use Case: Quick approvals, low-risk transactions, internal documents.
2. Advanced Electronic Signatures (AES)
Advanced electronic signatures offer a higher level of security by ensuring the signer’s identity is uniquely linked to the signature. They use encryption and authentication methods such as:
- One-time passwords (OTPs) sent to a mobile device.
- Multi-factor authentication (MFA).
- Unique digital certificates.
Use Case: Business contracts, legal agreements, and financial transactions.
3. Qualified Electronic Signatures (QES)
The highest level of security, a Qualified Electronic Signature is legally equivalent to a handwritten signature in many jurisdictions (e.g., under the EU eIDAS regulation). QES requires:
- A certificate issued by a trusted Certificate Authority (CA).
- Secure signature creation devices, ensuring encryption and authentication.
Use Case: Government documents, high-value financial agreements, legal filings.
Each type of electronic signature serves a different purpose, balancing convenience, security, and legal enforceability depending on the requirements of the transaction.
Beyond the types of e-signatures, formats also matter—they define how the signature is represented and verified in a digital file.
E-Signature Formats to Sign the Document
Different platforms may store or present e-signatures in various file formats, but the most common include:
- Embedded PDF Signatures – The signature is locked into the PDF file, complete with encryption and a visible certificate panel.
- Image Overlay Signatures – A scanned or drawn signature image is placed over the document field; best for simple agreements.
- XML Data Signatures – Often used for structured, machine-readable contracts or government submissions.
- Cryptographic Signatures in PAdES/XAdES/CAdES Standards – Advanced formats ensuring compliance with standards like eIDAS.
- Platform-Specific Tokens – Proprietary formats used by solutions like DocuSign or AdobeSign, containing embedded authentication data.
The choice of format often depends on the document type, industry regulations, and the security protocols required.
Benefits of Electronic Signatures
Electronic signatures have transformed the way businesses and individuals sign documents, offering a wide range of advantages. Here are some key benefits:
- Faster Document Processing: Gone are the days of printing, signing, scanning, and mailing documents. E-signatures allow instant signing, reducing turnaround times from days to minutes.
- Cost Savings: Using electronic signatures eliminates expenses related to paper, printing, postage, and storage. Companies save money by reducing administrative costs.
- Enhanced Security and Compliance: Digital signing methods (such as AES and QES) provide encryption, identity verification, and tamper-proof audit trails, making electronic signatures more secure than traditional paper-based signatures.
- Increased Convenience and Accessibility: E-signatures allow documents to be signed from anywhere, anytime, using a smartphone, tablet, or computer—ideal for remote work and global transactions.
- Eco-Friendly and Sustainable: Switching to electronic signatures helps reduce paper waste and carbon footprint, making it a greener alternative to traditional document signing.
- Legal Validity and Global Acceptance: Many countries legally recognize electronic signatures, ensuring they hold up in court when properly authenticated. Regulations like the ESIGN Act (USA) and eIDAS (EU) make e-signatures legally enforceable worldwide.
The use of electronic signatures and the tools that generate them has surged in recent years, with global eSignature transactions increasing from 89 million to 754 million over a span of five years.
While the benefits of e-signatures are universal, their impact becomes clearer when viewed through the lens of industry-specific use cases.
Where Are Electronic Signatures Used Most Effectively?
From regulated industries to high-volume contract environments, e-signatures are powering faster, more secure agreement cycles:
- Healthcare – Digital patient consent forms, insurance authorizations, and vendor agreements.
- Legal – Client onboarding, NDAs, and litigation documentation with audit-ready records.
- Procurement – Rapid contract turnaround with suppliers and logistics providers.
- Financial Services – Secure signing of loan agreements, onboarding forms, and disclosures.
- Human Resources – Offer letters, employment contracts, and compliance documents.
- Real Estate – Lease agreements, sales documents, and mortgage applications signed remotely.
By adapting to sector-specific requirements, e-signatures streamline compliance and accelerate operational processes.
How to Sign a Contract Electronically
Signing a contract electronically is straightforward and varies based on the electronic signature methods used. Here’s a step-by-step guide:
- Choose a Reliable Electronic Signature Software: Platforms like DocuSign, AdobeSign, and Namirial provide secure and compliant e-signature solutions.
- Upload the Document: The contract is uploaded to the e-signature platform.
- Place Signature Fields: Define where the signer needs to sign, initial, or provide additional information.
- Authenticate the Signer: Some platforms require identity verification via email, SMS, or biometric authentication.
- Review and Sign: The signer receives the document, reviews it, and electronically signs it.
- Store and Manage the Signed Document: Once signed, the document is securely stored and accessible for future reference.
By following these steps, organizations can ensure a smooth and legally compliant contract execution process. The ability to sign contracts electronically not only saves time and reduces paperwork but also enhances security and traceability. With seamless e-signature adoption, businesses can streamline approvals and focus on driving strategic initiatives.
Digital vs Electronic Signature: Is There a Difference?
Yes, there is a difference between digital signatures and electronic signatures, although they are often used interchangeably. Here’s a breakdown of how they differ:
- Electronic Signature (E-Signature)
An electronic signature is a broad term that refers to any electronic method of signing a document or agreement. It can be as simple as:
- Typing your name at the end of an email
- Clicking an “I Agree” checkbox on a website
- Drawing your signature with a stylus on a touchscreen
- Using e-signature platforms like DocuSign or Adobe Sign
- Digital Signature
A digital signature is a more secure form of an electronic signature that uses cryptographic algorithms to ensure the integrity and authenticity of a document. Digital signatures rely on:
- Public Key Infrastructure (PKI) to create unique, encrypted signatures.
- Certificates issued by trusted Certificate Authorities (CAs) to validate identities.
- Hashing and encryption to prevent tampering.
Related Detailed Article – Digital Signature vs Electronic Signature: Which Should You Use?
Digital Signature vs. Wet Signature: Which One is More Secure?
As businesses and individuals transition to digital workflows, a key consideration in contract execution is whether electronic signatures are more secure than traditional wet signatures. While wet signatures have long been the standard, digital signatures provide significant security, efficiency, and convenience advantages that are reshaping how agreements are executed.
The Security Limitations of Wet Signatures
Wet signatures require a signer to physically mark a document with ink, typically followed by manual verification. This process presents several vulnerabilities:
- Forgery and Fraud Risks: A wet signature can be easily forged, altered, or duplicated without proper safeguards.
- Lack of Authentication: Paper-based documents do not inherently verify the signer’s identity, making impersonation a significant risk.
- No Tamper Evidence: Changes to a signed paper document can go undetected, leading to potential legal disputes.
- Physical Storage and Loss: Paper contracts require secure physical storage, which can be cumbersome and susceptible to loss, damage, or theft.
The Security Advantages of Digital Signatures
Digital signatures, on the other hand, incorporate advanced security measures that enhance document integrity and authentication:
- Encryption and Authentication
- Digital signature technology uses encryption algorithms that protect the document from tampering.
- Authentication protocols, such as multi-factor authentication (MFA), ensure that only authorized individuals can sign.
- Audit Trails for Transparency
- E-signature software generates a comprehensive audit trail that tracks every action taken on the document.
- Metadata such as timestamps, IP addresses, email verification, and user identity logs provide undeniable proof of who signed and when.
- Remote Signing and Accessibility
- Unlike wet signatures, which require signers to be physically present, digital signatures allow contracts to be signed from anywhere.
- This is particularly beneficial for businesses with global teams, remote workers, and clients spread across different locations.
- Tamper-Evident Technology
- Once a digital signature is applied, any modification to the document renders the signature invalid.
- This provides an additional layer of fraud prevention, ensuring document authenticity remains intact.
- Regulatory Compliance and Legal Recognition
- Digital signatures comply with global e-signature laws, such as the ESIGN Act (USA), eIDAS (EU), and Information Technology Act (India), making them legally enforceable.
- Unlike wet signatures, which may require notarization for legal validity, digital signatures often meet compliance requirements without additional verification steps.
The Shift Toward a Fully Digital Contracting Ecosystem
The reliance on traditional paper-based contracts is rapidly diminishing as businesses recognize the inefficiencies of manual processes. Organizations are increasingly embracing e-signatures as part of a broader digital ecosystem that enables:
- Faster Turnaround Times: Digital contract signing eliminates delays caused by physical document handling, postal services, and in-person meetings, allowing agreements to be executed within minutes.
- Improved Compliance and Security: With built-in audit trails, encryption, and multi-factor authentication, e-signatures enhance document security and ensure adherence to international legal standards.
- Global Accessibility and Remote Collaboration: As businesses expand across borders, the ability to execute contracts remotely ensures seamless operations without geographical barriers.
E-signatures are no longer just the final step—they’re becoming integral to AI-driven contract automation and analytics.
E-Signatures in the Age of AI-Powered Contracting
In modern CLM systems, e-signatures are deeply woven into intelligent workflows:
- AI-Powered Routing: Contracts are auto-routed to the right signatories based on metadata.
- Cycle Time Prediction: AI identifies bottlenecks in the signing process before they occur.
- Anomaly Detection: Unusual signature sequences or skipped steps are flagged in real-time.
- Smart Triggers: A completed signature can automatically initiate fulfillment, renewals, or compliance workflows.
Sirion’s AI-native platform leverages e-signature metadata to continuously optimize contract velocity and governance.
Evaluating E-Signature Tools: What Matters Most?
Not all e-signature platforms are created equal. When selecting a solution for enterprise use, key features to prioritize include:
- Security protocols – End-to-end encryption, multi-factor authentication, and tamper-evident signing.
- Regulatory compliance – ESIGN, eIDAS, and IT Act alignment for global enforceability.
- Workflow integration – Native connectivity with CLM systems, CRMs, or procurement suites.
- Mobile and offline access – Support for signers on the go or in bandwidth-limited regions.
- Audit and tracking – Real-time status visibility, IP logs, and timestamped event trails.
- User experience – Easy-to-use UI for internal teams and external signers.
- Scalability – Enterprise-grade support for high-volume use and complex routing.
Sirion’s integrations with leading e-signature providers ensure that these capabilities are embedded into every step of the contract lifecycle.
Before exploring the legal frameworks that govern e-signatures, it’s important to understand their overall enforceability.
While the majority of business agreements can be signed electronically, certain categories are particularly well-suited for e-signature adoption.
Which Types of Documents Are Eligible for Electronic Signatures?
E-signatures are widely used for a broad spectrum of agreements, including:
- Business Contracts – Sales agreements, procurement contracts, partnership agreements.
- Human Resources Forms – Offer letters, NDAs, onboarding forms, policy acknowledgments.
- Financial Documents – Loan agreements, account opening forms, investment authorizations.
- Procurement & Vendor Agreements – Purchase orders, supply contracts, service-level agreements.
- Real Estate Transactions – Lease agreements, sales contracts, tenant communications.
- Regulatory Filings – Compliance reports, audit approvals, license applications.
These use cases are particularly effective because they combine high operational volume with the need for traceability, making the audit and security benefits of e-signatures invaluable.
That said, some documents are still restricted from e-signature use due to statutory or procedural requirements.
Documents That Are Not Eligible for Electronic Signatures
While laws increasingly support e-signatures, certain documents still require wet signatures or in-person notarization. These typically include:
- Wills and Testamentary Documents – Often require witness presence and notarization.
- Court Filings – Some jurisdictions mandate physical submission.
- Property Deeds and Transfers – In certain countries, these require registration with a land authority in physical form.
- Adoption Papers – Frequently require in-person verification by authorized bodies.
- Certain Powers of Attorney – Especially those involving property transactions or healthcare directives.
- Marriage and Divorce Documents – Governed by local marriage or family law requirements.
For these exceptions, businesses should verify local legislation and consider hybrid processes where electronic and physical steps coexist.
Are Electronic Signatures Considered Legally Binding?
Yes—in most jurisdictions, electronic signatures are considered legally binding when they meet the prescribed requirements for intent, consent, authenticity, and data integrity.
Regulations such as the ESIGN Act in the U.S., eIDAS in the EU, and the IT Act, 2000 in India provide the legal basis for treating e-signatures with the same enforceability as handwritten signatures. This legal recognition has enabled organizations worldwide to confidently execute high-value agreements, knowing that courts will uphold their validity when proper protocols are followed.
Legal Validity of Electronic Signatures: What You Need to Know
To be legally binding, electronic signatures must meet specific requirements that ensure authenticity, integrity, and compliance with regional laws. These requirements vary across jurisdictions but typically include:
Core Legal Criteria for Enforceability
- Intent to Sign: The signer must show clear intent to sign the document.
- Consent to Use E-Signatures: Both parties must agree to sign electronically.
- Tamper-Evident Technology: Documents must be protected against unauthorized changes.
- Audit Trails & Timestamping: E-signature platforms track every action taken on the document.
- Compliance with Legal Standards: Regulations like the eIDAS (EU) and ESIGN Act (US) dictate the legality of e-signatures.
When these conditions are met, electronic signatures hold the same legal weight as handwritten ones in most regions.
Jurisdictional Frameworks at a Glance
Understanding the regulatory landscape is crucial for businesses operating globally:
- U.S.: The ESIGN Act and UETA grant e-signatures the same legal status as wet signatures.
- Europe: The eIDAS Regulation categorizes electronic signatures into simple, advanced, and qualified signatures.
- India: The Information Technology Act, 2000 recognizes digital signature agreements as valid.
Understanding these regulations is crucial when choosing electronic signature software for business use.
Sirion’s region-aware signature workflows ensure every agreement complies with local laws—seamlessly and securely—no matter where it’s signed.
Electronic Signatures and International Laws: What Global Teams Need to Know
Legal recognition of e-signatures varies across jurisdictions. Here’s how to ensure compliance globally.
Navigating Cross-Border E-Signature Compliance:
- United States: The ESIGN Act and UETA recognize most electronic signatures as valid and enforceable.
- European Union: The eIDAS regulation defines strict tiers—only Qualified Electronic Signatures (QES) offer the same legal standing as handwritten signatures.
- India: The IT Act, 2000 governs digital signatures and mandates certificate-based authentication.
- China & APAC: Varies by country, with some requiring specific sign-off methods or local server residency.
Sirion supports region-aware signature workflows, ensuring that every signed agreement meets legal standards—no matter where it’s executed.
Even the most secure e-signature tools can’t mitigate risk if used incorrectly. Here are common pitfalls to watch for—and how to avoid them.
Common Mistakes When Using Electronic Signatures (and How to Avoid Them)
Avoidable E-Signature Errors That Could Undermine Legal Validity:
- Missing Consent Documentation: Always confirm that all parties have agreed to use electronic signatures.
- Lack of Authentication Measures: Use at least two levels of verification to prevent impersonation.
- Non-Compliant Tools: Ensure your platform meets jurisdictional requirements for regulated contracts.
- Manual Document Routing: Disconnected signing processes increase turnaround times and errors.
- Insecure Storage: Without a CLM system, signed documents may be lost or tampered with.
With Sirion, signatures are captured in context—fully traceable, compliant, and automatically linked to the contract’s full audit trail.
The Challenges of Managing E-Signatures: Bottlenecks in Contract Approval and Execution
E-signatures have revolutionized contract execution, but when not integrated into a Contract Lifecycle Management (CLM) system, they can introduce inefficiencies that disrupt workflows, delay approvals, and complicate compliance. Managing e-signatures separately from contract management processes can create major bottlenecks and expose organizations to operational risks.
Key Challenges of Disconnected E-Signature Management:
- Fragmented Workflows: Without CLM integration, e-signatures must be manually tracked across multiple platforms, increasing the risk of missed deadlines and misplaced agreements.
- Compliance and Legal Risks: Different jurisdictions have unique e-signature laws. Manually ensuring each contract meets regulatory requirements can be error-prone and lead to compliance gaps.
- Limited Visibility and Tracking: Organizations struggle with real-time status updates on contracts, making it difficult to determine which documents are pending, signed, or awaiting approval.
- Inefficient Contract Execution: The lack of automation forces teams to rely on email-based document exchanges, which slows down execution, increases administrative overhead, and reduces productivity.
- Security and Authentication Issues: Manually handling e-signatures without a centralized system increases the risk of unauthorized access, document tampering, and fraud.
A CLM software with integrated e-signature capabilities, like Sirion, eliminates these challenges by providing a unified platform where contract execution, approvals, and compliance tracking are all seamlessly managed. By ensuring a smooth and legally compliant signing process, businesses can accelerate contract finalization, reduce risks, and enhance operational efficiency.
Sirion: A Unified Platform for CLM and E-Signature Management
Sirion provides a seamless way to manage e-signatures alongside contract lifecycle management. Instead of juggling multiple systems, businesses can oversee the entire contract execution process—including e-signing—within a single platform. This integration ensures that documents move efficiently through the signature process, reducing delays and administrative overhead.
One of Sirion’s biggest advantages is its integration with multiple leading e-signature providers, allowing businesses to choose the solution that best fits their needs. Sirion supports seamless e-signature execution with:
- DocuSign
- AdobeSign
- Namirial
- Moxis
- Leegality
- OneSpan
- SirarSign
By consolidating e-signature capabilities within the CLM platform, Sirion eliminates the friction associated with switching between different tools. This unified approach not only simplifies compliance and security but also enhances operational efficiency, ensuring that contracts are signed and finalized without unnecessary delays.
Sirion’s Product Update on Electronic Signature Enhancement
The Future of Electronic Signatures
The widespread adoption of electronic signatures is revolutionizing the way businesses handle agreements, marking a significant shift toward efficiency, security, and seamless collaboration. As digital transformation continues to accelerate across industries, organizations that leverage e-signature technology, especially when integrated with robust Contract Lifecycle Management (CLM) solutions like Sirion, will gain a distinct competitive advantage in contract management.
Frequently Asked Questions
Are scanned signatures considered electronic signatures?
Yes, in many jurisdictions, a scanned image of a handwritten signature can qualify as an electronic signature—provided it’s accompanied by evidence of intent, consent, and proper authentication. However, it lacks the advanced security and audit features of true digital signatures.
Can electronic signatures be used for high-value transactions?
Yes, but for high-value or high-risk agreements, organizations typically use Advanced or Qualified Electronic Signatures (AES/QES), which include robust identity verification, encryption, and certification protocols to ensure legal enforceability and security.
How do I know if an e-signed document is authentic?
Authenticity is validated through features like tamper-evident seals, encrypted certificate details, and a verifiable audit trail showing who signed, when, and from which IP address. Most e-signature platforms provide a signature verification panel or certificate for reference.
Does Electronic Signature hold up in court?
Yes, provided it meets the legal requirements in the relevant jurisdiction. Courts in many countries, including under the ESIGN Act (US) and eIDAS Regulation (EU), treat a valid electronic signature as equivalent to a handwritten one. To be enforceable, it must clearly demonstrate the signer’s intent, have the consent of all parties to sign electronically, and include tamper-evident protections and an audit trail. When these conditions are met, electronically signed agreements are admissible in court and carry the same legal weight as traditional paper-based signatures.
What happens if a signer loses access to their email or device during the process?
Reputable e-signature platforms offer secure recovery protocols such as backup verification methods (e.g., SMS, alternate email), identity confirmation workflows, or admin re-authentication to ensure continuity without compromising document integrity.
Do all parties need the same e-signature software to sign a document?
No. Most modern platforms are cloud-based and designed for cross-compatibility. Signers typically access documents through secure links without needing to create accounts or download the software used by the sender.
Can I revoke an electronic signature after signing?
An e-signature can’t typically be “revoked,” but if the contract includes a withdrawal or cooling-off clause, the signer may have a legal right to rescind their commitment within a specified timeframe. Always review the agreement terms and local contract laws.
Are e-signatures suitable for notarized documents?
Not in all cases. Some jurisdictions require physical notarization, while others support remote online notarization (RON) using digital platforms. Whether an e-signed document can be notarized digitally depends on local laws and notary authority regulations.