Digital Signatures – When Can They Be Used?
Handwritten Signatures on Paper
Looking back at how cumbersome it has been over the years to sign official documents, one can’t help but be puzzled. Why did it take so long before we had a functioning system for digital signatures?
The traditional way of signing contracts and similar documents on paper is relatively complicated. If it involves an agreement, you must prepare as many copies as there are parties, and the copies must of course be identical. Then a meeting must be arranged for the parties to meet, sign, and exchange the documents. Alternatively, the documents can be sent by post for signature and return. All of this is both time-consuming and costly. In addition, there are several elements of uncertainty.
Sometimes someone claims that a signature on a paper document is forged. This often leads to disputes, and in the worst case, the original document must be sent to the National Forensic Centre in Linköping for verification. This process usually takes time and is not always successful.
Once the agreement has been signed by all parties, the original document must be securely stored. There is a risk that a paper document may be lost or damaged during storage. In the worst case, the document could fall into the wrong hands.
With digital signing, many of these traditional problems disappear.
Digital Signing
Digital signing is used in the same way as traditional handwritten signatures, allowing a user to perform legal acts in a legally binding manner, such as entering into contracts, issuing loan documents, signing annual accounts, making applications, or submitting certificates.
A digital signature is invisible and consists of electronic information interpreted by a computer. It can be created in various ways, but the most common for businesses and individuals is through a standalone signing service, such as our digital platform LegalBuddy, where signing is done via BankID. During the signing process, a unique certificate is created for the signature and linked to the signer. This allows verification afterward of who signed and what was signed. The advantage over traditional paper signatures is that a third party—independent of the signer—can help verify the authenticity of the signature.
Digital Signature Services
Several companies offer digital signing. Our platform LegalBuddy, for example, provides signing via Egreement. Signed documents are stored on secure servers with backup, and clients and contracting parties have continuous access to their agreements.
There is no official registry of digital signing providers. However, the Swedish Post and Telecom Authority (PTS) supervises services if there are suspicions that they do not comply with EU Regulation No. 910/2014 on electronic identification and trust services (eIDAS), which aims, among other things, to ensure the use of electronic signatures across the EU.
Most major e-signature providers are reputable, but before signing up for a digital signature service, you should verify that the provider has the resources to create, verify, and validate electronic signatures, store signed documents, and provide support if a digital signature is later challenged. It is advisable to review the provider’s general terms and conditions, as these may contain broad liability limitations that could prevent compensation if something goes wrong. Also check whether the provider is based in Sweden or another country, as disputes with a foreign company may be difficult to resolve. Ensure that the provider has robust personal data processing in compliance with GDPR.
Particular care is needed when choosing a signing service if the documents involve parties in countries other than Sweden. Rules on what can be signed digitally may differ between countries and how such documents must be handled. For a Swedish entity, it is therefore recommended to apply Swedish law and Swedish courts where possible.
Can All Agreements Be Signed Digitally?
Virtually all agreements and documents that require a signature can be signed digitally in Sweden, but there are exceptions. A general rule of thumb is that if there is no explicit legal requirement for a document to be drawn up in writing, signed, or witnessed, digital signing should be possible.
Below is a list of common agreements and documents and how they can be signed. Keep in mind that legislation has not always kept pace with digital signing, as many laws were enacted long before digital signing systems existed, and case law is still developing. This list may therefore become outdated in the future.
Currently allowed for digital signing:
- Contracts for the purchase, exchange, or gift of movable property
- Preliminary agreements and agreements on tenancy rights (but not transfers)
- Lease agreements (both residential and commercial)
- Settlement agreements
- Powers of attorney other than future powers of attorney, e.g., litigation powers of attorney
- Subscription of shares
- Meeting minutes and annual accounts
- Tax returns to the Swedish Tax Agency
Currently not allowed for digital signing:
- Contracts for the purchase, exchange, or gift of real estate or condominium (purchase deeds and contracts)
- Leasehold grants, easements, and usage agreements that must be registered in the land register
- Wills and division of property
- Future powers of attorney and prenuptial agreements
- Share certificates, subscription warrants, options, and convertibles
- Real estate agents’ assignment and deposit agreements
Finally
The law is evolving, and in the future, all document handling may take place digitally. We are not there yet. Legislation has not fully caught up with technology, and technical challenges, such as data security, still need to be addressed.
At LegalWorks, we aim to stay at the forefront of the law regarding digital document handling, including e-signatures. If you have any questions, you are welcome to contact us at info@legalworks.se.
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