LEGALITY OF E-SIGNATURES ON CONTRACTS

The prevalence of E-signatures expresses the legal questions about the optimal, suitability, efficiency, and security of the Parties on the contract. For more information,.let LawPlus find out more about the positive value.of digital signatures,.and scanned signatures on electronic contracts.

1. Electronic signature and legality of electronic signature.

An electronic signature.can be understood.as a form of information accompanied.by data used for the purpose of identifying.the owner of that data. Law on Electronic Transactions 2005.indicates the characteristics of electronic signatures,.including:
– Established.in the form of words, letters,.numerals, symbols, sounds, or other forms by.electronic means.
– Logically attached.or associated with an electronic contract.(for example by PDF or Word).
– Be capable.of certifying the person.who has signed the electronic contract.as well as the approval of such person.to the content of the contract. LEGALITY OF E-SIGNATURES ON CONTRACTS

The legality of electronic signatures: LEGALITY OF E-SIGNATURES ON CONTRACTS

Accordingly,.electronic signatures must have legal.value to be eligible to sign.electronic contracts. Pursuant to Article 24,.the Law on Electronic Transactions 2005.provides for the legal value of electronic signatures.as follows:
• In case the provision of law.requires a signed document,.such requirement with respect to a data message.shall be considered having been met.if.an E signature used for signing such data message.satisfies conditions as follows:
– The method of creating.the E signature permits identifying the signatory.and indicating his/her approval of the contents.of the document/ contract;
– Such a method is sufficiently reliable.and appropriate to the purpose.for which the data message.was created and sent.
• In case the provision of law requires a stamped document.with the seal of the concerned agency or organization,.such requirement with respect to a data message.shall be considered having been met if the data message.has an e-signature of the agency.or organization that satisfies.the conditions stipulated in Clause 1, Article 22.of this Law and the e-signature.is certified.
Thus,.electronic signatures are guaranteed legal value.when used in electronic transactions,.thereby contributing to promoting businesses,.and organizations to use electronic signatures more widely,.meeting the development needs of society.and integrating the international digital transformation.models.

2. Digital signature.

The digital signature.is often easily confused and.called into electronic signatures. However, in essence,.the digital signature is only a subset.of electronic signatures. The digital signature.is created by the transformation of a data message.using asymmetric cryptography in which those.who have initial data messages.and the public key of the signer can be determined.exactly:
– The above transformation.is created by the proper secret key.corresponding to the public key in the same key pair;
– Content integrity.of data messages since the implementation.of the mentioned above transformation.

2.1 The process of using digital signatures on electronic contracts is as follows:

Step 1: The Parties create digital signatures.on the specialized platform or.equipment of the digital signature certification service Supplier. The information.of encrypted individuals.and business organizations using personal key codes.for security

Step 2: After plugging in the USB Token,.the user uses the public key to log into the computer.to digitally sign. The user can sign digitally.when the public code and the personal code match. Therefore,.the digital signature is inserted electronically.into the contract to be signed. LEGALITY OF E-SIGNATURES ON CONTRACTS

2.2 The legality of the digital signatures on the contracts:

– In case.the law defines a document required to be signed,.the requirement for a data message is considered as met.if the data message is signed with a digital signature.and such digital signature is adequately secured.as prescribed.
– In case the law.defines a document required to be stamped by the agency,.or organization, such requirement for a data message.is considered as met if.the data message is signed by the digital signature.of the agency or organization.and such digital signature is adequately secured.as prescribed.
– Foreign digital signatures.and digital certificates licensed in Vietnam.are legally valid and effective as.digital signatures and digital certificates granted by.public certification authorities of Vietnam.
It can be seen that,.if the digital signature does not meet the above minimum conditions,.it does not have legal value. This leads.to users at legal risk.by not complying with the law. LEGALITY OF E-SIGNATURES ON CONTRACTS

2.3 Conditions to ensure security for digital signatures

The digital signatures.are considered secured electronic signatures.if it meets the following conditions:
• The digital signatures are created.during the valid period of digital certificates.and inspected by the public key recorded.on such valid digital certificates.
• The digital signatures are created.by using the private key corresponding to.the public key recorded on digital certificates granted.by one of the following authorities:
– Vietnam National.Root Certification Authority;
– Specialized certification authorities.of the Government;
– Public certification authorities;.
– Specialized certification authorities of agencies.and organizations issued with certificates of eligibility for.special-use digital signature security.
• Private Key.is only under the control of the signer.at the time of signing.

2.4 An organization or individual may use more than one digital signature

According to Vietnamese law,.a digital signature is used in.the operation of State agencies;.in the civil, business, commerce,.and other sectors prescribed by law. However,.Article 57 of Decree No. 130/2018/ND-CP.stipulates that digital signatures.used in the activities of the Party and State agencies.shall use digital signatures provided by the Government. Therefore,.an organization or individual can use more than.one digital signature.

2.5 The function of digital signature for businesses

The digital signatures are the solution.to help businesses:
• Digitally signs.public transactions online:
Declaration, payment of taxes, Customs,.digital signing on electronic invoices, Social insurance, C/O declaration,.business registration, suspension,.change of information… at the National Portal.and the administrative agencies in an online form.without having to transact by.paper records directly at the offices of State agencies.
• Digitally.sign in other transactions:
Transactions through banks,.securities, bidding,.signing contracts with partners … in an online environment without.having to make a direct appointment,.without wasting much time,.saving effort and printing costs.
LEGALITY OF E-SIGNATURES ON CONTRACTS

3. Scan the signature

A scanned signature.is an effective solution for contracts.in case the Parties or multiple parties of the contract.are not in the same location.

3.1 The process of using a scanned signature:

Step 1: The signer of each Party sign directly on the contract.by writing with a handwritten signature.

Step 2: The contract with the signature.on the contract will be converted into.electronic form. The scan method.of converting contracts.into electronic.

Step 3:.Send via email. LEGALITY OF E-SIGNATURES ON CONTRACTS

3.2 The legality of the scanned signature on the contract

According to Vietnamese law, specifically,.the Law on Electronic Transactions 2005.and Decree 130/2018/ND-CP only stipulates the legal value.of contracts made electronically.and.signed by electronic signatures including digital signatures. The law.does not specify the legal value of.the scan signatures on the contract.
However, Article 119 of the Civil Code 2015.stipulates:

“1. Civil transactions are expressed orally, in writing, or by specific acts.” LEGALITY OF E-SIGNATURES ON CONTRACTS

Civil transactions through electronic.means in the form of data messages.in accordance with the law on electronic transactions.shall be deemed to be written.civil transactions.
At the same time, Clause 4,.Article 400 of this Code stipulates:.The time when a written contract is entered into.shall be the time.when the last party signs the contract or.by other forms of written acceptance.
Accordingly, when entering into a contract,.the parties can sign the document by hand-drawn;.or by other forms of written acceptance. The other forms of written acceptance may be electronic signatures;.digital signature, scan signature,.image signature, fingerprint… to express the willingness to approve.the content agreed upon by the Parties.
As such, the scanned signature.on the contract still completely approved by law;.if the trading conditions are met in accordance.with applicable law.

4. Advantages when using electronic signatures, digital signature

• Digital signature.ensures legality on electronic invoices. Specifically,.one of the contents of the electronic invoice.is that it must have the digital signature.of the buyer,.the digital signature of the seller,.the electronic invoice shall be valid.(except for some special cases. that are specified separately such as stamps,.tickets, cards, supermarket invoices… it doesn’t need to have a digital signature.from the buyer and seller.

• Digital signatures.can be used to replace hand drawn signatures.in all cases of E commerce transactions and.ensure the legal value is equivalent to a hand drawn signature. The use of electronic signatures makes it more safe.and efficient to handle a significant number of documents and transactions,.specifically:

– Save time and.costs in the process of E transactions.
– Flexibility in the way contract documents.can occur anywhere, at any time.
– Simplify the process of transferring.and sending documents and records to partners.and organizational agencies.
– Secure the identity of individuals.and businesses safely.

5. The risks of using electronic signatures and solutions

Today, businesses often face risks.when using digital signatures to.declare electronic invoices. Most of them are at risk:

– Overdue risk:.This usually occurs.when the token containing the digital signature has expired. Enterprises should contact the digital certificate.Supplier directly for further extension,.to avoid interrupting the process of making and.issuing electronic invoices.

– Token devices can be damaged, poor quality, inactive:.This is a risk when the business uses the product.of an unreliable electronic signature Supplier.resulting in the quality of the token is not guaranteed.while using it. LEGALITY OF E-SIGNATURES ON CONTRACTS

– Digital signatures cannot be connected.to electronic invoice software:.This risk is due to a system failure.or the computer that made the declaration has not been installed.digital signing software. LEGALITY OF E-SIGNATURES ON CONTRACTS

To prevent these undesirable risks from occurring,.businesses should regularly check the effective time.of the digital signature. At the same time,.when choosing a Supplier of digital signatures.and electronic invoice software,.so that businesses should carefully consider before making a decision.
The above.is an entire analysis of regulations,.the legality of digital signatures,.and electronic signature on contracts that. businesses need to pay attention.to. Hopefully, by that,.Clients will have more important facts to.support businesses to have electronic transactions quickly,.valid, and legally. For more information,.please contact LawPlus at hotline.+84 2862 779 399,.+84 3939 30 522.or email.info@lawplus.vn.

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