Digital and Electronic signature usage is going through the roof around the world. Companies and organizations of all types are realizing the dramatic benefits of speed, agility, customer delight, and lower costs that digital and electronic signatures bring.
Signatures have many purposes, a common one is to represent agreement between two parties. 99% of the time (or more), the two parties will fulfill their agreement amicably. But what happens when there is a dispute?
That’s when a signature itself (“I didn’t sign that!”) or a document (“it was changed!”) may be challenged. With proper advance planning, it is easy to assure that agreements signed online won’t be successfully challenged.
Legal discussions of two recent cases caught my eye. Carmine Pearl discusses a case, Ruiz v. Moss Bros. Auto Group., where the employee successfully challenged an arbitration agreement that her employer claimed she had previously electronically signed. In court, her employer lost because they could not provide evidence that the signature to the agreement was “the act of” the employee.
As Carmine discusses, the court made it clear that such proof is easy to provide. Eg, have signers use a unique ID and password as part of the online signing process.
In Chau v. EMC Corp, the employee’s electronic signature in her arbitration agreement was upheld. Anthony Zaller discusses this case and also notes the importance of intent as part of the signing process.
Bottom line: Electronic and digital signatures provide tremendous benefits and can easily be used to create legally enforceable agreements. But you do need to plan your business process:
- How do you identify the signer? Ie, how do you know he is who he says he is? Is a photo ID checked at some point? This issue is the same for both wet ink signatures and electronic/digital signatures. So the first question to ask is, “How am I currently verifying the identity of my signers?”
- How does the signing system authenticate the signer? If it uses a name and password, does anyone other than the signer have access to the password? Can you eliminate the password weakness by requiring that the signer update the initial password or by using one-time passwords?
- How does the signer indicate her legal intent to sign the document? There are many ways to require and record the signer’s intent. For example, require that the signer proactively choose a “signing reason” as part of the signing ceremony.
- How does the signing system guarantee the integrity of the document—that it was not changed since signing? Standard digital signatures intrinsically provide this guarantee. Electronic signature vendors can also provide this guarantee through their applications.
As part of your online signature project, review your policies and procedures for identification, authentication, intention, and integrity of your signatures and documents with your legal counsel.
Simple steps and a bit of planning will enable your online signing project to be completely successful, including the rare instance when a signature or signed document is challenged.
Image credit: hierher