How to create an electronic signature

The electronic signature, which makes it possible to sign documents digitally or to agree to a transaction electronically, is becoming increasingly important. In this article, we will focus on how you can create such a signature. In addition, we will highlight their benefits and discuss how to transmit them securely. Their relevance is underlined by the rapid growth of the market: According to Mordor Intelligence, the digital signature market is estimated to reach USD 7.78 billion in 2023 and is expected to grow to USD 29.88 billion by 2028, a compound annual growth rate of 30.88%.

‍

Overview:

• What is an electronic signature?
• What types of electronic signatures are there?
• How does the validation of a digital signature work?
• Examples and areas of application of an electronic signature?
• How to create an electronic signature with ContractHero

‍

What is an electronic signature?

The electronic signature is like a signature that you put on paper, except that it is done online. It allows you to sign documents on the Internet or give your consent to an agreement online. The electronic signature acts as a legally recognized signature that is captured and transmitted digitally, making the identity of the signatory unambiguous and ensuring that the document has not been altered since it was signed. This technology is a key element in digital document management and enables secure and efficient confirmation of contracts and agreements.

‍

What types of electronic signatures are there?

Electronic signatures can be divided into three main categories, which are distinguished by different security levels and features:

Simple electronic signature (EES):
The EES is the basic form of electronic signature. It does not require any special authentication measures and is a basic way of documenting consent electronically.

Advanced electronic signature (FES):
The FES offers increased security as it can be clearly assigned to the signatory. Technical measures such as encryption and audit trails ensure the integrity of the document and the signatory can be authenticated.

Qualified electronic signature (QES):
The QES is the most secure and legally binding form of electronic signature. It is based on a qualified certificate issued by a certified trust service provider. The identity of the signatory is verified by official documents such as an ID card, and the QES is recognized for written form requirements.

Which of these three forms of signature is the right one depends on the internal and legal requirements.

‍

What is the difference between a digital and an electronic signature?

The terms "electronic signature" and "digital signature" are often used synonymously, but differ in their meaning:

Electronic signature: This term describes the legal function and includes any form of electronic confirmation of a document. It symbolizes the signatory's intention to enter into a binding agreement and creates a visual link between the signatory and the document.

Digital signature: The digital signature is a technical process that ensures the security and integrity of a document. The document is protected against manipulation by encryption using private and public keys and the creation of a certificate. It is comparable to a digital embossed seal and is used for authentication and traceability.

While the electronic signature concentrates on the legal aspect, the digital signature focuses on the technical protection and integrity of the document.

‍

How does the validation of a digital signature work?

A digital signature is validated in several steps to ensure that the signature is authentic and that the document has not been tampered with:

1. Creation of keys:
   An algorithm generates a private key (secret) and a public key (freely accessible).
2. Creation of a hash value (string of numbers):
   A digital fingerprint (hash value) is created from the document using an algorithm, which represents the content of the document.
3. Encryption of the hash value:
   The hash value is encrypted with the signatory's private key and forms the digital signature.
4. Verification by the recipient:
   The recipient decrypts the signature with the sender's public key and independently creates a new hash value from the received document.
5. Comparison of hash values:
   The new hash value is compared with the decrypted hash value. If both match, the signature is authentic and the document is unchanged.

This procedure guarantees that both the identity of the signatory and the integrity of the document can be verified.

‍

The advantages of electronic signatures

Electronic signatures are fundamentally transforming how companies, organizations and individuals sign, manage and exchange documents.
These are the benefits of using electronic signatures:

Increased efficiency:

• Speed up the signing process: Electronic signatures significantly shorten the document signing process by eliminating the need for physical meetings or mailing. This leads to faster processing of contracts and agreements.
• Immediate document approval and access: Digital signatures allow documents to be approved and viewed immediately after signing, enabling immediate further processing and decision-making.
• Reduction of waiting times: Eliminating the physical dispatch of documents speeds up the entire process, which is particularly beneficial for time-critical transactions.

Increased security:

• Protecting the integrity and authenticity of documents: Electronic signatures ensure that the content of the document remains unchanged since it was signed and that the identity of the signatory is authenticated.
• Tracking and documentation of signature history: Each digital signature is provided with a time stamp and other information, which ensures precise traceability and transparency.
• Prevention of unauthorized changes: Advanced technologies in digital signatures recognize every change to the document after the signature, which increases security and credibility.

Environmental friendliness:

• Reduction in paper consumption: Electronic signatures eliminate the need for physical documents, which leads to a significant reduction in paper consumption.
• Reduction in energy consumption and CO2 emissions: Less paper production and transportation means a reduction in energy consumption and CO2 emissions, which is positive for the environment.

Cost savings:

• Reduced costs for printing, paper and mailing: Electronic signatures reduce the costs for materials and mailing that are incurred with conventional paper documents.
• Minimized need for physical storage of documents: Storing documents digitally reduces the need for physical storage space and associated costs.

Global and remote access options:

• Sign documents regardless of location: Electronic signatures make it possible to sign documents from anywhere in the world, which is particularly useful for global business relationships and mobile workers.
• Support for mobile and flexible working models: The ability to sign from anywhere supports flexible working arrangements and home office models.

‍

‍Examples and areas of application of an electronic signature?

Simple electronic signature (EES):

The EES is suitable for form-free agreements or documents with a low liability risk. It is used, for example, to digitally confirm receipt of a parcel or to give consent by ticking a box in an online form.

Advanced electronic signature (FES):

FES is ideal for contracts that require traceability and document protection. One example is the conclusion of a purchase contract in online trading, where the identity of the parties must be verified.

Qualified electronic signature (QES):

The QES is used for legally prescribed written form requirements or for documents with high security and traceability requirements. It corresponds to a handwritten signature and is used, for example, for fixed-term employment contracts or real estate purchase agreements that require a high level of legal certainty.

‍

The various types of electronic signature offer companies and private individuals flexible options for signing documents securely and efficiently - depending on the specific legal and security requirements. But what exactly is the legal recognition and security of these signatures?

‍

Legal recognition and security of digital signatures

Electronic signatures have received significant recognition and regulation through various legal frameworks, in particular through the eIDAS Regulation in the European Union. This regulation represents a decisive step in the standardization and legal protection of electronic signatures and contributes significantly to harmonizing their use throughout the EU.

The eIDAS Regulation (Electronic Identification and Trust Services for Electronic Transactions in the Internal Market) defines clear standards and requirements for electronic signatures. It distinguishes between simple electronic signatures (ees), advanced electronic signatures (fes) and qualified electronic signatures (qes), with each level offering a higher level of security and legal binding force. Qualified electronic signatures in particular have the highest security standard and are considered legally equivalent to handwritten signatures.
Read more about the different types of electronic signature here.

This regulation ensures that digital signatures are recognized as legally binding and reliable across national borders. This creates a secure environment for electronic transactions and strengthens trust in digital processes. Companies and individuals alike benefit from this security, as electronic signatures can be used in a variety of legal and business contexts.

Overall, these legal regulations provide a solid basis for the use of digital signatures by ensuring their legal validity and at the same time guaranteeing a high level of security and trust.

‍

How to create an electronic signature with ContractHero

ContractHero offers contract management software specifically designed for companies to optimize the management of contracts. It offers a comprehensive solution for the digitalization of contract processes, including the ability to sign contracts digitally.

To create an electronic signature with ContractHero efficiently and legally compliant, follow these steps in a logical and sensible order:

1. Request signatures digitally: Start by specifying who should sign the contract in your ContractHero account. Decide whether the signatures should be obtained sequentially or simultaneously. Use the CC function to inform other relevant persons about the signature process.
2. Send personalized invitations: Send personalized contract signing invitations through the ContractHero system. These can include specific instructions or justifications to simplify the signing process and make it more user-friendly.
3. Select different signature types: Choose between the advanced electronic signature (AdES) and the qualified electronic signature (QES) to best meet the needs of your contractual partners.
4. Define individual signature placement: Determine the exact position of the signature in the document. Add necessary details such as date, signer's name and initials to ensure the legal validity and accuracy of each contract. Once everything is positioned, send the signature request.
5. Execution of the signature: The designated signatory receives an email with a link to the document. Using the mouse or a touchpad, the person can then create and send a handwritten signature directly in the document.
6. Track status digitally: Monitor the progress of signatures directly in ContractHero. Automatic updates inform you of the current status without you having to follow up manually.
7. More control over the signature process: Allow signers to decline to sign or cancel the signature process if necessary. Send reminders for pending signatures to speed up the completion of contracts.
   
   For a detailed video explanation of this process, we invite you to watch the following video:

‍

By using ContractHero, you can simplify the electronic signature process and significantly increase the efficiency and legal certainty of your contract management. Arrange a free demo with one of our experts now and discover the possibilities of electronic signatures with ContractHero.