Why Your E-Signature Solution is Critical When it Comes to Enforcing Agreements
In the United States, federal (the Electronic Signatures in Global and National Commerce Act (ESIGN) and state (the Uniform Electronic Transactions Act (UETA)) legislation establish that electronic signatures have the same legal effect in most cases as physical or wet signatures. But there’s a catch: if you get into a dispute over an agreement, you still have to prove that the document and the signature are authentic. And that’s not as straightforward as it seems as not all e-signatures are created equally—a lesson that many individuals and businesses learn the hard way after it’s too late.
Take, for example, this typical agreement dispute:
- A service provider (“SP”) is sued by a customer (“C”) who claims a commercial right for the provision of identified professional services at a specific cost.
- SP denies liability and argues that an e-signed agreement between SP and C states something different (e.g., different services to be provided or at a different cost) or obliges the parties to resolve the dispute in arbitration (e.g., precluding C from suing SP in court).
- C denies signing the agreement relied upon by SP, thereby placing the agreement and specifically the e-signature in dispute.
- SP must meet an evidentiary burden by showing that C signed and agreed to the specific terms and conditions (e.g., scope of services to be provided or the specific price) in the agreement.
All too often, a party seeking to enforce such an agreement realizes too late that it relied upon a software vendor that provided signing functionality with insufficient signer authentication capability, making enforcement of the agreement difficult.
At first glance, a basic, no-frills e-signature approach like a scanned image or scribble signature, might seem to provide what customers need. But an electronic signature is more than just a digital image of a signature.These bare-bones e-signature solutions may put customers’ agreements at risk, and customers usually don’t know this until it’s too late.
Many of these solutions fail to provide adequate workflows, audit trails and other capabilities, which help ensure that agreements can be legally enforced. The vendors of these no-frills e-signature solutions often tell their customers that it's the customer’s responsibility to know that inexpensive, or even free solutions, do not have the same adequate protections as a more robust e-signature solution.
This problem was compounded during the COVID-19 pandemic when companies raced to implement e-signature solutions as quickly as possible, often with buying decisions made at the division, department or even workgroup level. As a result some organizations have found themselves managing multiple different e-signature solutions, with different features and different levels of security and authentication from different providers with different levels of sophistication and experience, often with a lack of appreciation that they have placed the enforceability of their digital agreements at risk.
While price is a critical factor in determining which e-signature solution to choose for an organization, no one should ignore the cost and risk of difficult or impossible to enforce agreements that can result from choosing an inadequate e-signature solution. In today’s anywhere economy, with businesses and customers expecting to be able to execute contracts from just about anywhere, it’s imperative that businesses evaluate e-signature solutions closely and holistically.
DocuSign eSignature provides strong authentication, robust workflows and a comprehensive audit trail (e.g., its certificate of completion). eSignature keeps agreements secure by digitally sealing documents using Public Key Infrastructure (PKI) encryption which makes sure the electronic signature is valid and provides a mechanism to detect whether the document has been tampered with. DocuSign further strengthens its infrastructure by using geographically dispersed data centers with active and redundant systems and networks that are physically and logically separated. DocuSign also uses commercial-grade firewalls, malware protection, near real-time replication and data encryption in transit and at rest.
DocuSign’s approach has been regularly tested with its customers in court and has been consistently established as a reliable tool to help individuals and businesses ensure that their agreements are legally enforceable.