pixel

Electronic Signatures: Key Aspects for E-Signature Enforceability

Electronic Signatures: Key Aspects for E-Signature Enforceability

Investigators with magnifying glasses inspecting a document

In today’s fast-paced world, electronic signatures (e-signatures) have become increasingly popular as businesses and individuals look for efficient and secure ways to sign and exchange documents. With the growing adoption of e-signatures, questions and concerns have arisen regarding their legality, admissibility, and security. In this article, we will discuss the legal landscape surrounding e-signatures, address common concerns, and outline how reputable e-signature providers ensure that electronic signatures are secure and legally enforceable.

In this article, we cover:

Four Key Aspects for E-Signature Enforceability

I’ve compiled this list as a blueprint for what I believe should serve as important aspects of every signature process. It is not meant to be an exhaustive list, nor a requisite list.

1. Proof of Identity

  • The most fundamental means for ID verification in the e-signature process, and the most commonly used, relates to the signer’s access to an email address to which a hyperlink to the e-signature process is sent.
  • Emailing an e-signature link to the signer’s email address requires the signer access the email address using their login credentials with their email provider. Here, the email address can be shown to belong to the signer; and the signer begins the signature process through the link sent to the email address.
  • In some instances, it would be wise to lock the document with a password that is communicated through a separate channel to the signer. This serves as a ‘two-step’ like verification.
  • You’ll notice that some vendors (e.g., electricians, plumbers, general contractors) often require you to E-Sign a tablet that they provide when they are selling you the work at your physical location. This exposes the vendor to issues surrounding invalidity of the e-signature they obtain through this tablet. Why? It could be argued that they do not engage in the identity verification stage of the e-signature process. This enables them to sign on behalf of unsuspecting customers – and this does happen. Who is to say that the signature on the tablet, which was then affixed to the document, was not forged by the vendor? This is similar to the classic issue inherent in the ordinary wet-signature process.

2. Transmitted Copies of the Signed Document.

  • There is no ‘true and final physical copy’ in the E-signature process. Thus, to account for this issue, each Signing Party should be provided with a signed copy of the agreement at the conclusion of the e-signature process. Each party must have access to the same document, and neither party can be denied access.
  • A common solution is to immediately email the signed copy to each party’s email address – the same email address that was used to initiate the e-signature process.
  • Failing to comply with this stage will raise invalidity and enforceability issues for e-signed documents.

3. Document Immutability

  • This one is certainly obvious. The electronically signed document should not be modifiable or manipulated. Embedded Tamper-evidence should be inherent in the document structure.
  • For example, if the document is at all manipulated after the signature process, then the electronic signature portion of the document should be removed / blocked or otherwise obfuscated.
  • This serves as a good protective measure against any downstream fraud.

4. The Audit Trail

  • An audit trail shows Identifiable Information (Device, IP Address, etc.) associated with any pre-signature access or manipulation of the document.
  • Although it is not required, this aspect relates to aspect (1) as part of a ‘two stage’ authentication process. First, we accumulate evidence to show that the signer had control and access to their email address through which the e-signature process commenced. And, second, we accumulate evidence to show that the IP address of the device used to access the document was indeed affiliated with the signer.
  • A good audit trail keeps track of the documents history – thereby enabling the signers to know who reviewed, approved, edited, and/or signed the document. This helps formulate a list of witnesses and informed, competent parties, who may be called to testify upon any validity concerns associated with the document.

E-Signatures: Legality and Admissibility

The legality of e-signatures in the United States has been solidified by the adoption of the Uniform Electronic Transactions Act (UETA) by the majority of states, as well as the federal Electronic Signatures in Global and National Commerce Act (ESIGN) in 2000. According to these rules, e-signatures cannot be denied admissibility solely based on their electronic form.

Both UETA and ESIGN establish several important rules and requirements for e-signatures, including:

  • General Validity: A signature cannot be denied legal effect solely on the basis of its electronic form.
  • Intent to Sign: A signature is only valid if the signer intends to sign.
  • E-Signature System Requirements: The e-signature system used to capture the electronic signature must keep a record that shows how the signature was created or generate a text or graphic statement reflecting that the signed record was executed via electronic signature.
  • Consent: Under ESIGN and some state versions of UETA, consumers must have received certain disclosures and have consented and maintained their consent to using electronic records.
  • Record Retention: Electronic signatures are enforceable only if they are capable of being retained and reproduced or referenced by all individuals who have a right to the record.

Addressing Common Concerns

  • Forgery: One main concern regarding e-signatures is determining the signer’s identity. However, this concern is not exclusive to e-signatures; even traditional print-sign-scan methods merit the same scrutiny. The primary difference between e-signing and wet-signing lies in the authentication methods that technology offers. Reputable e-signature providers authenticate signers through email login, pin codes, or knowledge-based authentication. Additionally, they provide audit trails that capture email information, IP addresses, and timestamps, ensuring the intended recipients were the viewers and signers of the document.
  • Document Manipulation: Ensuring that a document has not been tampered with is essential for legal purposes. By choosing a reputable e-signature provider with robust security measures, the risk of document manipulation is significantly reduced. Secure encryption, unique document IDs, and detailed audit trails help maintain the integrity of the signing process.

State-Specific Electronic Signature Laws

Under state laws, contracts, documents, and other records signed and stored electronically are generally admissible in court. For instance, both Massachusetts and Florida have specific provisions stating that records or signatures cannot be denied legal effect or enforceability solely because they are in electronic form. Reputable third-party providers can help by supplying an audit trail to authenticate electronic records.

State UETA laws typically guarantee electronic records and signatures the same legal force and effect as their hardcopy and wet-ink counterparts. However, UETA does not require parties to use electronic signatures or records; it simply allows for their use if both parties agree. State UETA laws often carve out exceptions for certain types of transactions, such as the creation and execution of wills, codicils, and testamentary trusts; provisions of the Uniform Commercial Code (except for Articles 2 and 2A); and transactions governed by rules relating to judicial procedure.

Conclusion

E-signatures offer a secure, efficient, and legally enforceable way to sign and exchange documents in the digital age. By choosing a reputable e-signature provider with strong security measures and understanding the legal landscape surrounding electronic signatures, businesses and individuals can confidently embrace this technology and streamline their processes. As the world continues to become more digitized, staying informed about the laws and best practices related to e-signatures will ensure that all parties can effectively navigate the digital world, while maintaining the security and legal validity of their signed documents.

Need more help? Give us a call at +1-800-530-4983 or click here to schedule a free consultation with one of our attorneys.

Related Posts

When you visit our website, it may store information through your browser from specific services, usually in form of cookies.