Using electronic signatures saves time and paper. But when seeking approval on a document, what constitutes an enforceable act? An email reply simply stating, “Okay,” “I approve,” “I agree” or “I accept”? An electronic or digital signature? Simply typing in your name, or scanning in your handwritten signature? A timestamp acknowledgement?
In the U.S., two acts establish the legality of electronic signatures – the Uniform Electronic Transactions Act (UETA, 1999) and the Electronic Signatures in Global and National Commerce Act (ESIGN, 2000).
The main federal law, the ESIGN Act, says that contracts with electronic signatures may not be denied legal effect or enforceability solely because they are in electronic form. The UETA Act works alongside the ESIGN Act, helping to ensure that consistency exists amongst potentially varying state laws in the 47 states that have adopted the UETA Act so far.
An electronic signature is as simple as typing your name or inserting a digitized image of your handwritten signature onto a document. However, there are inherent flaws — for example, how can you ensure the signature’s owner “signed” the document and not someone else?
A digital signature (or standard electronic signature) addresses this question. Offered by companies such as DocuSign, Adobe EchoSign, RightSignature and CoSign, digital signatures include a coded message that is unique to the document and signer, ensuring the signer matches the signature (and vice versa) and the document is not edited after it has been signed. It helps prevent forgeries and tampering by protecting signer authenticity and data integrity.
For the signature to qualify as a digital signature, the service company you use must, according to the law, keep a record showing the signature creation process or include a statement on the signed record stating that it was executed with a digital signature.
In addition, the ESIGN Act states that businesses required to keep records of contracts must have electronic copies of those contracts as well — and those signed files must be accessible to all signatories and not stored on a company server.
For legal departments, integrating their contract management system with an electronic signature provider (and vice versa) makes the overall contract process smoother and more convenient. Electronic records can be kept in accordance with the SIGN Act, and using both a contract management system and esignature company ensures you have full audit trails, version history and metadata for the contract process and signer actions. No longer do you have to rely on the slow process of waiting for paper to be mailed back and forth, nor do you have to continually print and then scan paper if you’ve been using a hybrid electronic and paper system.
When evaluating contract management systems, be sure to find one that integrates seamlessly with a digital signature company that knows your state laws and what constitutes an enforceable signature.