As the adoption of digital practices increases across all areas, it’s no surprise that electronic signatures have become a standard tool used by modern businesses. Whether you’re signing a commercial contract, approving a purchase order, or onboarding a new employee, the chances are you’re doing it digitally rather than with pen and paper.
For Scottish businesses, this shift brings obvious benefits in the form of faster turnaround times, reduced printing and postage costs, and simpler document management. But, it also raises an important question: are electronic signatures actually legally binding?
The short answer is yes – but with some important caveats. Not all electronic signatures carry the same legal weight, and choosing the wrong type for a particular transaction could leave you exposed if things go wrong.
Simple electronic signatures
At the most basic level, a simple electronic signature might involve typing your name at the bottom of an email, clicking an “I accept” button on a website, or inserting a scanned image of your handwritten signature into a PDF or Word document. They’re quick, convenient, and legally valid in principle.
Advanced electronic signatures
An Advanced Electronic Signature (AES) provides a much higher level of assurance. To qualify as an AES, the signature must be uniquely linked to the person signing, capable of identifying that person, and created using electronic means that remain under their sole control.
An AES is usually gathered using a dedicated e-signature platform that provides timestamped records of when the document was opened, viewed and signed, along with IP addresses, device information, and any verification steps taken during the process.
Qualified electronic signatures
A Qualified Electronic Signature (QES) is the digital equivalent of a traditional wet signature, and can only be issued by a qualified trust service provider. A QES requires robust identity verification, typically involving official documents such as passports or driving licences. The technical standards and security measures are significantly more stringent than for other e-signature types.
Electronic signatures and Scots law
Electronic signatures are recognised and enforceable under Scots law, with the legal basis sitting primarily within the Requirements of Writing (Scotland) Act 1995, alongside retained EU law under the UK version of the eIDAS Regulation. Together, these laws confirm that electronic signatures can satisfy legal requirements for writing and signing in most circumstances.
However, the level of security varies significantly depending on which type you use. This is distinguished by Scottish law and can make a significant difference if the validity of a document is later questioned.
The right signature for the job
Choosing the right type of electronic signature is fundamentally about assessing risk. Ask yourself: what would happen if this signature were challenged?
Simple electronic signatures are widely used for low-risk transactions such as customer account registrations, internal approvals, routine purchase orders, or everyday business correspondence. The problem is that they offer very limited proof if someone later disputes the signature’s authenticity. If a party claims they never signed a document, it can be difficult to demonstrate conclusively who applied the signature and when. For anything with significant financial or legal consequences, you’ll need stronger protection.
An AES strikes a good balance between convenience and legal protection for most important business arrangements, such as commercial contracts, supplier agreements, and employment documents. It provides a clear paper trail of the signing process, showing who signed and when, which can act as invaluable supporting evidence if a contract signed with an AES is later challenged.
QES carries the strongest legal effect under Scottish law, providing the highest possible level of assurance for legally complex arrangements, such as shareholder agreements. It is often unnecessary for most day-to-day business transactions, but where legislation requires certain documents to be “self-proving”, a QES can meet this requirement without needing a witness.
When using a simple electronic signature or an AES, it’s advisable to retain any supporting evidence throughout the process, like email exchanges confirming the agreement, records of negotiations, and automated confirmation messages from signing platforms. While not providing the same level of protection as a QES, all of these can help demonstrate that the document was genuinely signed by the intended party.
The practical reality
Electronic signature technology has significantly matured in recent years and the legal framework is well-established, offering a reliable and efficient way to conduct business. By matching the level of security and evidential strength to the importance and risk of each transaction, you can enjoy the benefits of digital working while maintaining proper legal protection.
Some documents have specific statutory requirements about how they must be executed, and not all of these can be satisfied electronically. For example, high-value property transactions, wills, powers of attorney, and certain court documents may require particular formalities.
If you’re dealing with an unusual, complex, or high-value transaction, seek legal advice before relying on electronic signing. A solicitor can confirm whether electronic signing is appropriate and, if so, what level of signature is needed.
John Roberts is a Partner and Director at Austin Lafferty Solicitors. John has been with the firm for almost 20 years, with experience in all areas of business law.
