Right here last week, we revealed new research from the Association for Information and Image Management (AIIM) suggesting that a lack of faith in the validity of electronic signatures (eSignatures), among other things, was holding back the adoption of paper-reducing practices in U.S. companies.
Somewhat surprised at that news, we thought now would be a good time to share with readers here why eSignatures are just as good as “wet ink” signatures, and to remind them that the Prizm Content Connect thin-client document viewer offers a secure, affordable solution for eSigning more than 300 different types of documents and other electronic files.
First, a disclaimer: The author of this blog entry is not a lawyer. This article is intended to give you an overview. If you want specific legal advice about the use of eSignature at your company, you know who you need to talk to.
They’re Legal. Everywhere.
Broadly speaking, courts are required by federal law and by individual laws in all 50 states (and in Canada, the U.K., and the E.U., among others) to accept eSignatures as valid on all types of documents, with a few key exceptions, such as wills.
More accurately, these laws bar courts from refusing to admit a document as valid and signed solely because its signature was collected electronically. The 2000 E-SIGN (Electronic Signatures in Global and National Commerce) Act puts it simply: “A signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form…. A contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.” So there.
You may have noticed that the E-SIGN act does not specify the technical requirements an eSignature must meet to be valid. That’s by design; the law requires the acceptance of eSignatures but leaves the door open to any technological approach (credentialed login, click-thru, biometrics, and so on) so that the law will remain applicable even as the technology enabling it evolves and diversifies. There are more stringent, additional regulations for certain industries, such as the pharmaceutical industry, that do specify the application of particular technological approaches.
But You Still Have to Do Them Right
Here’s the tricky part: In a legal proceeding, any document, whether signed electronically or by pen, can have its validity called into question by counsel, who might succeed in having it thrown out of evidence or its terms declared unenforceable. What proof is there that the signature (E or otherwise) cannot be a forgery? Is the document a copy or other alternate version that would be superseded by an original? Does the audit trail reveal opportunities for the document’s contents or its signature to have been altered?
Case law already provides a great illustration of the risks: In Kerr v. Dillard Store Services, Inc. (2008), department store chain Dillard’s said an employee was bound by a mandatory arbitration agreement she had electronically signed; the employee claimed she never signed it. The court sided with the employee because her supervisor knew the employee’s login ID and password, and thus had access, opportunity and motive to sign the agreement on the employee’s behalf. It was not the fact that the document was electronically signed that undermined its enforceability, but rather the weaknesses of the specific provisions the employer had taken to ensure the authenticity of the signature.
The lesson of Kerr v. Dillard is not that eSignatures are any less ironclad than wet ink ones, but that how you go about collecting them matters. Just as a written signature in pencil can be called into question because of how easily it can be altered, an eSignature collected without sufficient safeguards can be picked apart in court.
That’s why Prizm Content Connect’s eSignature module keeps documents secure and private among interested parties. Hosted eSignature services often pass documents through third-party servers, which not only opens a doorway through which an attorney might walk to suggest an opportunity for alteration, but also violates specific regulatory requirements in some industries.
And while Accusoft’s secure document-viewer based solution enables you to view and eSign more than 300 different file types, the signed document can only be saved as a PDF file. PDF is the most widely accepted format for eSigned documents, and the one least vulnerable to ex post facto alteration.
The Bottom Line
Properly collected, eSignatures are as good as ink. Using eSignatures not only reduces paper, but also enables you to dramatically speed up contract signings, non-disclosures, and other agreements to keep your business moving.