5 Key Components to Producing Legally Enforceable Electronic Signatures

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The benefits of switching to fully electronic agreements are clear – lower document storage costs and ease of searching electronic documents, less time between agreement presentation and full execution, and no overnight or mailing costs. However, some businesses are reluctant to leave the comfort zone of tangible paper and make this switch, no matter how beneficial it can be for their bottom line. With a solid plan in place and the right technology, any business can make this switch easily and ensure that their electronic agreements are as enforceable in court as their former paper counterparts.

No matter whether a business chooses to maintain and execute its agreements in paper hardcopy or fully electronic, the business must always be able to prove (1) that the person who signed the agreement signed it knowingly and intentionally, and (2) that the person named in the agreement is the person who actually signed the agreement. When a business uses paper hardcopy there are time and true tested ways to prove this (handwriting analysis, production of the original “blue-ink” signed agreement, detection of paper text alterations). But businesses choosing to switch to fully electronic agreements need to look at a little more than just the signature and the agreement itself to be sure those agreements are enforceable.

Courts who have evaluated the enforceability of electronically executed and/or maintained documents have provided business guidelines to ensure their electronic agreements are enforceable. Businesses must be sure that the technology and procedures they choose to execute and maintain their electronic agreements can do all five of the following:

(1)  Issue user names to authorized persons and require such persons to immediately change the default password upon log in to a unique and confidential password;

(2) Automate log in password change requests such that the password is used and changed only by the person issued the user name associated with that password, and record the date, time and terminal at which each password change request is made;

(3) Present the agreement for review and execution in a manner which allows the person viewing the agreement to easily read the agreement in full, and download it to personal electronic storage and/or print it out, both before and after signing;

(4) Retain the integrity of the agreement that is posted for execution to ensure that no part of the agreement is changed after it is signed by the first party and throughout its lifetime; and

(5) Provide an “audit trail” showing every time the agreement is accessed and/or signed, the date, time and terminal at which agreement is accessed and/or signed, the user names of all persons accessing and/or signing that agreement, any “changes” to the agreement including deletions, copy print outs and electronic file transfers of the agreement, and all other information regarding the execution and maintenance of that agreement.

eOriginal® solutions comply with all five requirements for enforceability. Additionally, eOriginal offers businesses the flexibility and cost-savings of hosted, online document execution and vaulting or, if they prefer, taking the execution and vaulting functions behind the firewall on their own servers with an enterprise license. For more information on eOriginal® solutions and technology, feel free to contact our sales department.