Your E-Signature Is Not Your Bond?

To many people, the word contract still evokes images of two parties coming together to put their signatures to paper. Now? Business moves far too quickly for that old fashioned nonsense. Today is the age of the electronic signature.

If you're feeling nostalgic about the simpler times before electronic signatures became a mainstay of business transactions, who can blame you. At least the Federal Rules of Evidence could rely on witnesses who had personal knowledge of what a "real" version of your signature was supposed to look like. Today, although the validity the e-signature practice is not questioned, the signatures themselves may be deemed inadmissible in court.

Your Word E-Signature Is Your Bond

In more virtuous times, contracts were formed over a handshake with no more guarantee than the parties' honor. Remember the phrase, "Your word is your bond"? Fast forward several centuries and parties are falling over themselves to find new ways to get out of contractual obligations. E-Signatures are vulnerable to being questioned by the court.

Screwed by Substandard Signature Software

One of the most common forms of electronic signature used today involves sending a fillable PDF or DOCX file. You've seen these before: you'll click on the file and your signature will fill in, complete with pseudo-italics to make it look like the real McCoy. It turns out that fillable PDFs signatures, although technically valid, might be so fraught with fraud potential that a court could deem them inadmissible for want of proper authentication. After all, anyone with access to your cloud could sign for you and it would look exactly the same. Intent of the alleged signor is still too dubious. The result? Your buyer or client can potentially walk scot free.

Solutions for Using E-Signatures

There's no question about it: courts recognize e-signatures. The 2000 E-Sign Act made it law that no contract can be denied legal effect soley because it is signed electronically.

Great. This is essentially E-Statute of Fraud with a band-aid laid on top. It still leaves open the possibility that courts will ceremoniously glance at a contract and still deny its enforceability because the circumstances surrounding the e-signature are too dubious.

Solutions? If you simply must use e-signatures, use DocuSign or Adobe's EchoSign software. The programs were specifically tailored to meet the E-Sign Act's purpose and intent. Plus, with these programs there is an option that specifically forces the signor to actually write out his name, thereby parroting what he would do face-to-face on paper. This alone lends weight.

Keep in mind that DocuSign and EchoSign are proprietary programs and fees apply. But if your contract is particularly important, maybe the expense is a reasonable one.

Another solution? Get a physical signature.

Related Resources:

• Electronic Signatures in Global Commerce Act (NCUA.gov)
• Sign-N-Send Makes Electronically Signing Legal Docs a Breeze (FindLaw's Technologist)
• e-Signatures: Should Your Business Use Them? (FindLaw's Free Enterprise)