What is a digital signature and when is it valid?

Is a digital signature legally valid on the Internet? And: What conditions must be met for an electronic signature to be effective? Lawyer and BASIC thinking columnist Carsten Lexa reveals what is important in order to sign digitally in a legally compliant manner in Germany.

Digital signature: The legal situation

In principle, digital signatures have been legally valid in the EU since the introduction of the eIDAS regulation in 2016 – with exceptions. What is important to know is that the legislation allows many documents to be signed digitally, but not all.

Some may still only be signed on paper or – if electronically – with a special form of digital signature. Which signature you need depends on the contract type.

To help you understand this statement, let's first look at the three types of digital signature that are legally recognized: the simple electronic signature, the advanced electronic signature and the qualified electronic signature.

Three types of electronic signature

1. Simple electronic signature

You probably know this: you sign something on a tablet with your finger. This corresponds to a simple electronic signature. It does not require any special certificate and is technically the simplest solution. Alternatives to this would be, for example, a scanned signature or typing in a name.

This form of signature is often sufficient – especially if the law does not require a specific form. However, when it comes to using your signature as evidence in the event of a dispute, things could become problematic. The simple electronic signature has only weak evidential value because it is often difficult to prove whether it was really you who signed the document.

2. Advanced electronic signature

The next level is therefore the advanced electronic signature. It's a bit more formal because it requires a digital certificate (without the identification effort as with a qualified electronic signature) that is clearly assigned to you.

The advanced signature must therefore be created using technical means so that it can be clearly assigned to you. This is done by various service providers who, in particular, take care of the assignment. The advanced electronic signature is always legally valid if the law does not impose strict formal requirements, such as the written form.

It is suitable for documents that require more certainty about who signed a contract – such as non-disclosure agreements or participation agreements. In the event of a dispute, you can use the advanced signature to prove that you actually signed.

3. The qualified electronic signature

Finally, there is the qualified electronic signature. It is equivalent to a handwritten signature on paper. To do this, you must identify yourself – either in person or via a video identification process – and have an official certificate created that confirms your identity.

This form of signature is particularly necessary for documents that the law requires to be in writing. Advantage of this form of signing: If you sign a document with a qualified signature, you have the highest possible evidential value.

When is a digital signature valid?

The question of when exactly you can use a (simple or advanced) electronic signature depends on the so-called freedom of form, which is a principle for contracts in Germany, and ultimately on whether the electronic form of the signature is generally permitted.

The freedom of form means that you can conclude many contracts without a formal signature – you can conclude such contracts verbally, but also by email or with messenger messages.

Because you don't even have to explicitly say “I agree to the contract!”, but you could, for example, respond to the question via WhatsApp: “Do you want to buy the tablet?” with a thumbs-up emoji.

However, something different always applies when a stricter form is required by law or even electronic form is excluded. By the way, most contracts in Germany are free of form.

Examples of informal contracts

• Purchase contracts
• Agreement to Terms and Conditions
• Rental contracts (permanent)
• Non-disclosure agreements
• Orders and order confirmations
• Contracts for services

You can basically use any of the three signature forms for these contracts. Depending on the importance of the document and your risk assessment, it may make sense to use the advanced or qualified signature to increase the evidential value.

As already mentioned, there are also types of contracts for which the law sets certain requirements with regard to the form of the contract. This is the case with the written form. For these contracts, a simple or advanced electronic signature is not sufficient; instead, a qualified electronic signature is required.

Typical examples of documents that require such a qualified electronic signature would be:

• Fixed-term employment contracts
• Fixed-term rental agreements
• Contracts for temporary employment
• Consumer loan agreements

When it comes to these or similar contracts, you have no choice: if you want to sign digitally (and electronic signing is actually permitted by law), the qualified electronic signature is the only possible digital way. Alternatively, you can of course still take the traditional route with paper and pen.

Conclusion: Digital signature

The digital signature offers you the opportunity to work quickly, efficiently and paperlessly in legal transactions. But the correct choice of signature form is crucial when signing so that your contracts are legally valid.
For most everyday agreements, a simple electronic signature is sufficient.

However, when it comes to important documents with a high level of risk or contracts that require written form, you should rely on a qualified electronic signature or this is a prerequisite for effectiveness.

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