What do I need for an electronic signature to be valid?
September 14, 2009 2:21 PM   Subscribe

What constitutes acceptance for a digital contract? Currently we are e-mailing out contracts, vendor prints out contract, signs it and scans it back. This is leading to large 50-60MB documents for longer (~200pg) contracts. What are some solutions?

I've read through the electronic signatures act and it is rather vague. It seems that the requirements for signatures are pretty low via the traditional way we are doing things (how easy it would be to fake a signature or what constitutes a signature for poorly sent faxes). It seems to me if someone is willing to lie and say the signature is faked they can already be doing it via traditional means given how easy it is to photoshop a signature or alter the document to make it look authentic. I've never run into a situation where someone has come back and claimed the signature was not theres or that the contract we have on file is different from their contract.

What needs to be captured? I assume requiring an e-mail address, the name of the person, the date and the tax id of the business would be sufficient? Keep this in an XML document and provide a PDF/A to download for the vendor's records?

I'm not opposed to going with a third party (DocuSign, EchoSign), but this seems so easy to do ourselves. Plus I worry about vendor lock-in and ability to track data if it is outside our hands.

Oh and I will, of course consult a lawyer (probably a team) if I ever implement this but I was trying to get some ideas as to what the cool kids do when it comes to contract management.
posted by geoff. to Computers & Internet (11 answers total) 4 users marked this as a favorite
One place I worked e-mailed a PDF form of my employment contract which I "signed" by checking a box and entering my SSN.

Please do not do this: sending SSNs through unencrypted e-mail is a Really Bad Idea.
posted by miyabo at 2:37 PM on September 14, 2009

Best answer: IANYL, and this is not legal advice, and I have no particular expertise in the E-SIGN Act or corporate law generally. But why on earth are you scanning the rest of the document? Get the person to sign a signature page and scan that. Then print the rest of the document to PDF and add the signature page to the file at the end. Send the signer a PDF copy of the execution version of the contract, including the signed signature page.

Do you not have counsel to answer this for you? It seems odd that your business has 200+ page contracts and no general or outside counsel who can give you good advice on this, specific to your jurisdiction.

/s/ Admiral Haddock.

P.S. not legal advice.
posted by Admiral Haddock at 2:57 PM on September 14, 2009 [1 favorite]

No advice here in the green is going to help you whatsoever. You need counsel that will advide you on what you need to do in the various jurisdictions that you deal with.
posted by mmascolino at 3:07 PM on September 14, 2009

Response by poster: Send the signer a PDF copy of the execution version of the contract, including the signed signature page.

Unfortunately the problem is not on our end, as the process you describe is what we do. The problem is on the other end where we send the contract with the signed page and we will often get back the huge documents (in case you're wondering right now they send back the huge documents via a secure form where they can upload it to our file server).

I think I should clarify and say that I'm asking this from a technical perspective I guess the reason that DocuSign can charge what they do is not so much that they are doing something hard from a technical perspective, but that they have their processes audited and I'm guessing their validity has been tested in court.

So let me rephrase and ask if anyone has experience with web based contract execution and what their experiences are? I'm looking for a nice accessible API so that the contracts don't reside in a silo and can interact with our custom workflows.

Again let me stress that I'll be seeking counsel, I'm just looking for some ideas or recommendations with what works or what people enjoy using.
posted by geoff. at 3:28 PM on September 14, 2009

Best answer: Our counsel at my old job let us use scanned signature pages routinely for corporate activity in jurisdictions including NY, CA, MD, TX and others. Sometimes corporate by-laws required hard copies. Definitely check with counsel, but scanning entire documents just to get that one signature page seems highly unusual.

IANAL, but I was a great client for associates needing billable hours.
posted by mullacc at 3:33 PM on September 14, 2009

Best answer: The problem is on the other end where we send the contract with the signed page and we will often get back the huge documents

Not sure I understand your clarification...why can't you just direct the other end to only upload the signed pages?
posted by mullacc at 3:36 PM on September 14, 2009

Response by poster: Okay well this makes sense: the client we are working with is European where it is apparently common practice to initial every page. Indeed the original contract with them is initialed on every page (as we are working in the US there is no legal reason to do this but their counsel insisted on it). Apparently the client demanded that whenever we send the document back and forth it have the initialed pages, leading to the huge document bloat. The paralegal who was actually preparing and e-mailing the documents was told to send every page when dealing with the client, not realizing that the reason to do this was because of the initials on every page.

So when that finished she brought on to help prepare contracts for vendors and insisted that every page be returned. Apparently this persisted for what looks like 6 months and actually grew as other people started to think it necessary. What is funny is that no vendor ever called to complain, we were probably the crazy client who wanted every page returned.

What is funny is that I called up our overworked lawyer and asked him why the whole thing was being returned and he just repeated "When working with the PDF everything must be returned!" leading me to think there was some sort of special requirements when dealing with PDFs to fulfill the acceptance requirement. So I wonder how many times he got chewed out about not returning these initialed pages to produce this Pavlovian response. He said driving home it dawned on him what I was really asking.

So in short, yeah returning the signed page only is fine. Thanks!
posted by geoff. at 4:24 PM on September 14, 2009

Response by poster: Argh, What is funny twice, well long day, you can't expect me to proofread ...
posted by geoff. at 4:25 PM on September 14, 2009

I have worked with a vendor that used http://www.echosign.com/. From my end it was super easy, and definitely much easier than scanning/printing/faxing.
posted by avex at 6:40 PM on September 14, 2009

Not legal advice at all, but technical. The proper (IMHO as a computer scientist) solution to this is cryptography, typically public-key crypto. Both parties have keypairs, someone writes a contract, both parties sign the contract document digitally. Exchange the signature blocks. Each party can therefore prove (via the received public keys) that the other has signed it.

Not that this helps the OP, sorry. Scanned signatures are so 1985.
posted by polyglot at 8:57 PM on September 14, 2009

polygot's solution is the correct one from a pure math perspective but that doesn't mean it is the right solution from a legal perspective or if there is a practical implementation of this approach for your customer base.
posted by mmascolino at 7:10 AM on September 15, 2009

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