High-Value Contracts: QES vs AES – Which E-Signature Level?

High-value contracts are business agreements that carry significant consequences for your organisation. These aren't defined solely by monetary value—though that's often a factor—but by their strategic importance, legal complexity, or regulatory requirements.

Typical characteristics of high-value contracts include:

• Substantial financial commitments (e.g., contracts exceeding £100,000 or involving long-term payment obligations)
• Long-term business relationships with key clients or strategic partners
• Agreements subject to strict regulatory oversight (financial services, healthcare, real estate)
• Contracts involving intellectual property transfer or licensing
• Documents requiring enforceability across multiple jurisdictions

Examples include merger and acquisition agreements, commercial property leases, large-scale procurement contracts, loan agreements, and executive employment contracts.

The stakes are high: an invalid signature or disputed contract can result in financial losses, litigation costs, and damaged business relationships.

The eIDAS Regulation (EU) n°910/2014 defines three levels of electronic signature: Simple Electronic Signature (SES), Advanced Electronic Signature (AES), and Qualified Electronic Signature (QES). For high-value contracts, only AES and QES provide sufficient security and legal certainty.

Both AES and QES offer multi-factor authentication, audit trails, and tamper-evident technology. However, they differ in certification requirements, legal presumption, and implementation complexity.

An Advanced Electronic Signature is an electronic signature that meets four specific security requirements under eIDAS Article 26, providing strong authentication without requiring certified hardware devices.

An AES must meet four specific requirements:

1. Uniquely linked to the signatory: The signature is created using data that the signatory can use with a high level of confidence under their sole control
2. Capable of identifying the signatory: The signature enables identification of the person signing
3. Created using signature creation data: Data used by the signatory to create the electronic signature
4. Linked to signed data: Any subsequent change to the data is detectable

AES provides strong authentication through methods such as SMS one-time passwords (OTP), email verification, or mobile app authentication. It offers a practical balance between security, user experience, and cost.

Key benefits of AES:

• Flexible authentication methods adaptable to user preferences
• Cost-effective implementation for medium to large volumes
• Excellent user experience with quick signature processes
• Legally binding across the EU and recognised in most jurisdictions
• Suitable for the vast majority of business contracts

A Qualified Electronic Signature is the highest level of electronic signature under eIDAS, legally equivalent to a handwritten signature in all EU member states, created using a qualified certificate and certified signature creation device (QSCD).

A QES must meet all AES requirements plus two additional criteria:

1. Created using a Qualified Electronic Signature Creation Device (QSCD): A secure hardware or cloud-based device certified to strict technical standards (FIPS 140-2 Level 3 or higher)
2. Based on a qualified certificate: Issued by a Qualified Trust Service Provider (QTSP) after rigorous identity verification

QES is legally equivalent to a handwritten signature in all EU member states and enjoys a presumption of legal validity in court proceedings. This means the burden of proof falls on anyone challenging the signature's authenticity.

Key benefits of QES:

• Maximum legal assurance and presumption of validity
• Mandatory for certain regulated transactions (e.g., notarial acts in some jurisdictions)
• Equivalent to handwritten signatures across all EU countries
• Enhanced trust for cross-border transactions
• Strongest evidence in dispute resolution

However, QES typically requires more complex onboarding (identity verification by video or in person), higher costs per signature, and may involve additional time for signatories.

The decision to use AES or QES depends on:

• Regulatory obligations specific to your sector and jurisdiction
• Transaction type (real estate, financial services, public procurement, etc.)
• Risk assessment and potential litigation costs

Always verify whether your specific use case legally requires QES by consulting legal counsel or checking sector-specific regulations.

Advanced Electronic Signature is the optimal choice for most high-value business contracts where legal validity is important but absolute equivalence to handwritten signatures isn't legally required.

Use AES when:

• Commercial agreements: Sales contracts, service agreements, distribution agreements, and partnership contracts where both parties are businesses operating in good faith.
• Employment contracts: Executive employment agreements, non-disclosure agreements, non-compete clauses, and termination agreements. AES provides sufficient legal protection while ensuring quick processing.
• Intellectual property agreements: Licensing agreements, trademark assignments, and IP transfer documents where speed and efficiency matter.
• Multi-party contracts: Agreements requiring signatures from multiple stakeholders where coordinating QES would create unnecessary friction.
• Cross-border B2B transactions: International contracts between businesses where both parties accept electronic signatures and AES meets local legal requirements.
• Volume transactions: When you need to execute dozens or hundreds of contracts monthly and cost-efficiency is a priority.

Qualified Electronic Signature should be reserved for situations where maximum legal assurance is required, either due to regulatory mandates or the extraordinary nature of the transaction.

Use QES when:

• Regulated industries: Banking and financial services contracts, insurance policies, healthcare agreements subject to strict compliance requirements. Certain jurisdictions mandate QES for specific regulated transactions.
• Real estate transactions: Property sale agreements, mortgage deeds, lease agreements for commercial properties in jurisdictions requiring notarisation or equivalent legal formality.
• Notarial acts: Documents that traditionally require notary involvement, such as powers of attorney, corporate resolutions, or statutory declarations.
• Cross-border legal disputes risk: Contracts where there's a higher likelihood of legal challenge or where you need maximum enforceability across multiple European jurisdictions.
• Government contracts: Public procurement agreements, concession contracts, or any agreement with government entities that specify QES requirements.
• M&A transactions: Merger agreements, share purchase agreements, asset transfers where stakes are extremely high and you want absolute legal certainty.

Follow this decision tree to determine which signature level fits your high-value contract:

Step 1: Check regulatory requirements

• Is QES legally required for this transaction type? → Use QES
• Is AES explicitly permitted? → Continue to Step 2

Step 2: Assess legal risk and dispute probability

• High likelihood of legal challenge or court proceedings? → Consider QES
• Standard commercial transaction with established parties? → Continue to Step 3

Step 3: Evaluate cross-border enforceability needs

• Need guaranteed equivalence to handwritten signatures across all EU countries? → Use QES
• Contract primarily enforceable in UK or limited jurisdictions accepting AES? → Continue to Step 4

Step 4: Consider volume and cost constraints

• High volume of similar contracts (>50/month)? → AES is more cost-effective
• One-off or low-volume strategic transaction? → Continue to Step 5

Step 5: Prioritise user experience

• Signatories need quick, frictionless process? → AES offers better UX
• Willing to add identity verification step for maximum legal certainty? → Use QES