Documents that are signed electronically have all the same legal protections as those that are signed with a ballpoint pen. Despite this, the leading concerns among the majority of businesses interested in obtaining e-signatures on contracts and other important paperwork is whether these electronically executed documents will be both legally valid and admissible in court.
In the United States, judges have ruled for e-signatures time and time again. Thanks in large part to the E-Sign Act, which states that transactions should not be “denied legal effect” solely because of their electronic form, businesspeople and consumers can have full confidence that their e-signatures are legally valid. As long as an electronic signature is obtained in the appropriate way, using compliant technologies, certifications, and authentications, it will have full validity under the law. But will the document be admissible in court and will a judge enforce the terms of the contract?
Businesspeople and consumers should know that legal validity, court admissibility, and enforceability are not the same thing. Each concept has a distinct definition, set of requirements, and, most importantly, contribution to the outcome of a legal dispute.
The E-Sign Act states that signatures should not be denied legal validity solely because they are electronic, which means that a contract that is signed electronically can be brought into trial. However, a judge’s willingness to accept that contract will depend on how the electronic document was signed.
Certain criteria must be met in order for an e-signature to be admissible in court. Any person who hopes to present an electronically signed contract in front of a judge needs to be able to prove the intent of the signatory and the security of the signed document. If the document could have been tampered with or altered in any way after it was signed, there is a high likelihood that a judge will refuse to allow it to be admitted in court. Specifically, an e-signed document may be legally valid but ruled inadmissible in court due to weaknesses in security, audit logs, or authentication. This is why it is critical that businesses select an e-signature solution that is highly reputable and meets the highest standards of technical integrity.
Lastly, the enforceability of a contract depends not only on its validity and admissibility, but also the contents of the agreement itself. In a dispute, a judge may examine whether: the terms of a particular agreement were clear and consistent, there was consideration (an exchange of value between parties), the parties had legal capacity (ability) to sign, whether a party was under duress or undue influence, and whether a party signed by mistake or without knowledge of the agreement’s meaning. Most businesses have an attorney draft or review their agreements prior to execution with these criteria in mind, in order to maximize enforceability in the future should the contents of the document face scrutiny in court.
In examining the admissibility of an e-signed document in court proceedings, a judge will analyze the security, auditing, and authentication protocols of the e-signature technology and process.
An e-signature system should be fortified with bank-level security protocols to ensure that documents and audit records may never be tampered with or accessed by unauthorized parties. If there is any security vulnerability which provides credence to an argument that an executed electronic document’s integrity may be questionable, a judge may rule the document inadmissible.
From a judicial perspective, audit logs are an important part of legal compliance. Timestamped audit logs enable parties, including the court, to verify when a document was created, viewed, signed, and archived. Audit logs should be detailed and secured with a digital signature, checksum, or similar method to ensure they remain tamperproof.
The more an electronic document can be authenticated, the higher the likelihood that a judge will accept that document as evidence in court. However, authenticating documents can be a slippery slope, and some authentication measures can be so burdensome that they detract from the accessibility and convenience that have made e-signatures so popular. The key, then, is to find ways to authenticate documents that are verifiable, admissible, and defensible, without overwhelming the parties involved. Best practices in e-signature authentication involve a multivariate approach that includes biometric authentication, audit logs, and signature certificates.
Biometric authentication identifies people based on intrinsic physical traits. RightSignature, for example, has a proprietary biometric authentication technology that captures unique characteristics related to the speed and timing of a person’s signature. This type of data is representative of a particular person’s physical movements and establishes the proof of the signer’s identity and intent if either are questioned in court.
By confirming access to a particular email account and capturing an IP address, e-signature systems are able to link the identity of a signer to the computer and software used in the electronic signature event.
By taking SHA-1 or similar digital checksums, sophisticated e-signature platforms are able to record evidence of every stage of the contract creation and signing process. This tracks every change and modification, and prevents anyone from tampering with a contract at any time.
Photo authentication is one of the most cutting-edge tools used to validate the identity of signing parties. When a webcam or mobile phone camera captures the face of a signatory during the electronic signature event, all doubt is removed as to that person’s identity and capacity to sign.
Court-admissible signature certificates offer judges and legal professionals a way to view and verify a document’s validity data, audit logs, and signatory information – such as full name, signature, IP address, email address, and any other identifying details. Signature certificates are a significant component in authenticating signed documents in court.
A number of additional authentication methods can help ensure an electronic contract’s admissibility, as well. Some high-end e-signature platforms are now able to confirm signers’ phone numbers by requiring that they enter a code received via phone call or text message before a contract can be completed, along with requiring that signers enter their drivers license numbers and other personal information to verify their identities.
One of the toughest challenges for businesses that are trying to conduct transactions electronically is to know how far they should go when vetting and authenticating signatories. For many companies, the ultimate goal is to create a contract that is legally valid and admissible in court without establishing a process that is cumbersome to the people whose signatures are needed to complete the transactions.
Striking this balance can be difficult, which is why many companies select a trusted e-signature software platform when conducting important business matters online. By using established technology, businesses can rest assured that contracts are legally valid and admissible, while still providing consumers and business counterparties a seamless, intuitive signing experience.