It’s time to start the conversation about electronic signatures. You’re probably still signing all your contracts, lien waivers, payment applications, and other important documents by hand, but who blames you? How are you supposed to know that there are alternatives out there that are growing in popularity and are just as legally binding as pen to paper signatures with a notary? Look no further to find out your options. We’re here to inform you of the details about e-signatures and best kept practices, as well as the reasons why you should leave behind normal handwritten signatures. E-sign act “allows the use of electronic records to satisfy any stature, regulation, or rule of law requiring that such information be provided in writing, if the consumer has affirmatively consented to such use and has not withdrawn such consent.” So, in simple terms this groundbreaking law which was passed in June of 2000 by President Bill Clinton granted e-signatures the same status as a written signature. This means e-signatures are legal in all 50 states where federal law applies, but don’t just go typing your name on a document, and call it signed. We recommend you read more to understand the various requirements associated with e-signatures in order to make them valid, and some incentives to move away from paper-based signatures.According to the Federal Deposit Insurance Corporation (FDIC), the
Here are the five factors that make an electronic signature legally binding. They are:
1. Intent to SignAn e-signature, like a traditional paper-based signature, requires each party to intend to sign, in order for that signature to be valid. An indicator for this could include a checkbox asking if you agree or wish to continue in signing the document.
2. Consent to Do Business ElectronicallyIn addition, it is critical that the parties agree to do business online. Often times before signing, you will be asked if you are certain in doing electronic business. A sure-tell sign of this might be a box where you click yes or no.
3. AuthenticationFurthermore, in order to validate an electronic signature, you need to make sure the person signing is indeed the person whose signature is being placed on a document. So traditionally on paper this is done using a notary, but for e-signatures there are other options. These could be a unique user pin, password, multi-factor authentication, emailing a secure link or other security questions similar to how a bank identifies your identity over the phone. It is also important to establish attribution to the individual who signed the document. This is commonly recorded in an audit trail that can be traced back to original signee.
4. SecurityIt is also paramount that the signature is binding and secure to the document and there is proof of non-alterability after the signature has been placed on an electronic document.
5. Record RetentionAfter signing, you need a record of the contract, who signed it and how they signed it. Digital signature software will provide you with the option to save your copy or it will be saved in a place that is easily accessible to the signee. The following best practices are based on legal framework for the use of electronic signatures set out by the Uniform Electronic Transactions ACT (UETA). This legal framework for electronic signature validity has been adopted by all 50 states excluding Illinois, New York and Washington. These states have implemented their own statues relating to e-signatures, so we recommend if you do business in these states that you contact an attorney to get more details.
Taking it to CourtCan electronic signing uphold the law? In 2011, “the Supreme Court of Arkansas affirmed the lower court’s judgment in favor of GEICO, upholding the applicability of the Uniform Electronic Transitions Act (“UETA”) to a waiver of minimum medical coverage.” A woman waived for minimal medical coverage during an online application for GEICO. After a car accident, she sued GEICO claiming that her signature was not “in writing,” because the signature was done electronically. The Court noted that her signature had the five factors for a binding electronic signature and sided with GEICO.
Why Electronic Signatures MatterFor one, it is much more secure and safe to digitally sign documents rather than signing with pen and paper. Your signature is protected at the point of signing. Let’s walk through the process of this. When you sign digitally, there is a
- Graphical representation of your signature
- Location you signed from
- Timestamp in which you signed
- Authentication of your signature
- The main idea was to simplify the on-boarding process for general contractors. To do this, they had to identify what was inhibiting them from a speedy process.
- Secured Signing proposed the idea of “eStarter and eContracts that streamline processes related to contract preparations including sensitive contact information (Tax File Numbers), ABN & PAYG information and management of the signing processes required
- Secured Signing’s “Personalised X509 PKI Digital Signature technology” helped PeopleBank to manage its on-boarding process in a secure and efficient manner
- PeopleBank’s staff now uses this software for contract and signing processes and it has cut down the process by 1.5 hours for each employee.