Are E signatures legally binding?
Discussion
Currently when we go through the whole contract exchange process we email the contract to the client and ask them to print and sign two copies, return them to us, we counter sign one and return it back to them.
We've been looking at being more efficient and using one of these e-signature packages (adobe echosign) but wondered what the legal situation would be if something went wrong and it ended up going legal.
Would a court view an e signature using this type of technology the same as an actual bit of paper actually signed by both parties?
We've been looking at being more efficient and using one of these e-signature packages (adobe echosign) but wondered what the legal situation would be if something went wrong and it ended up going legal.
Would a court view an e signature using this type of technology the same as an actual bit of paper actually signed by both parties?
Marcellus said:
Currently when we go through the whole contract exchange process we email the contract to the client and ask them to print and sign two copies, return them to us, we counter sign one and return it back to them.
We've been looking at being more efficient and using one of these e-signature packages (adobe echosign) but wondered what the legal situation would be if something went wrong and it ended up going legal.
Would a court view an e signature using this type of technology the same as an actual bit of paper actually signed by both parties?
What did your company's solicitors say when you asked them?We've been looking at being more efficient and using one of these e-signature packages (adobe echosign) but wondered what the legal situation would be if something went wrong and it ended up going legal.
Would a court view an e signature using this type of technology the same as an actual bit of paper actually signed by both parties?
Depends if the signature is "Electronic" or "Digital". An electronic signature can't be held up in a court of law because typically to obtain one requires only possession of a username and password or similar. A Digital signature requires that a signature issuing authority has provided you with a unique identifier that is certified and approved and can be held up in law.
Source: Work with electronic record keeping systems for the aerospace industry!
Source: Work with electronic record keeping systems for the aerospace industry!
Not many contracts required a signed, written contract in order to be binding - no doubt BV will be along shortly.
Depends on the deal value, the calls/correspondence leading up to the agreement and so on as to the level of risk you want to carry.
If you have emails going back and forth between you and a supplier detailing the products/services, price, delivery etc and they then e-sign a PDF contract they may struggle not to be held to the terms agreed.
If its a contract where there's no correspondence trail and the other party then claim they didn't agree to the terms, that they didn't receive a PDF etc - you then have the hassle of proving it was them etc.
Depends too on the value of the contract - if its a £5m, 5 year supply contract for widgets you'd want to cover your butt anyway.
If its a low value contract, take a commercial view on whether the risk of loss in the event of X% of disputed contracts is greater than the admin cost of getting docs signed.
You can do it electronically by emailing them a PDF of the full agreement and having them sign and scan the signature page and then email back the scanned sig page and pdf of full agreement. But there are a bunch of formalities that your lawyer should be able to advise on.
Depends on the deal value, the calls/correspondence leading up to the agreement and so on as to the level of risk you want to carry.
If you have emails going back and forth between you and a supplier detailing the products/services, price, delivery etc and they then e-sign a PDF contract they may struggle not to be held to the terms agreed.
If its a contract where there's no correspondence trail and the other party then claim they didn't agree to the terms, that they didn't receive a PDF etc - you then have the hassle of proving it was them etc.
Depends too on the value of the contract - if its a £5m, 5 year supply contract for widgets you'd want to cover your butt anyway.
If its a low value contract, take a commercial view on whether the risk of loss in the event of X% of disputed contracts is greater than the admin cost of getting docs signed.
You can do it electronically by emailing them a PDF of the full agreement and having them sign and scan the signature page and then email back the scanned sig page and pdf of full agreement. But there are a bunch of formalities that your lawyer should be able to advise on.
As John says, most contracts don't have to be in writing and so don't have to be signed at all. Exceptions include contracts for land sales and guarantees. In general, there is no legal magic about signatures. The question is have the parties agreed terms. If there is some issue as to whether a person had authority to bind a party, arguments about who signed what may arise. Gordon Ramsay is embroiled in a case about whether his father in law had authority to use an auto signing machine to enter a guarantee.
I add that it is always open to parties to a deal to agree between them that particular formalities are required for their transactions.
I add that it is always open to parties to a deal to agree between them that particular formalities are required for their transactions.
Marcellus said:
We've been looking at being more efficient and using one of these e-signature packages (adobe echosign) but wondered what the legal situation would be if something went wrong and it ended up going legal.
This is the key point, and as BV has said, the issue of authority is probably more important than the technical aspects of the format of the signature.From experience, and I am sure the majority of your clients are not problematic, and in those situations they don't mind if the caretaker's cat has signed the contract.
However, on that 1 in 100 situation where things go wrong, or for whatever reason the client finds that it would be better that your agreement did not exist, you can get your bottom dollar that every technical detail will be looked into.
Authority is a hot one - as there are some absolute defences, Google 'ultra vires' for example.
In such situations you can be left with looking at a tangled web of internal politics, and various overlapping contractual principles. That'll probably be looked at more than an electronic signature, as has been mentioned, an email from someone saying 'I agree to X' can be just as binding.
Breadvan72 said:
As John says, most contracts don't have to be in writing and so don't have to be signed at all.
That may be the legal view. However, from an accounting standpoint you need to have something called "persuasive evidence of arrangement" before you can recognise any revenue on a contract. If in a business it is customary for contracts to be signed by both parties, then without that you cannot recognise any revenue against that contract.Thank you everyone, yes even you Pie!
I think we're covered as;
- we are the supplier to the customer who on the whole are private individuals
- there is always a good email trail showing offer and acceptance
- the contract is then sent together with the details of where to make payments
- if they disagree with the terms and conditions then they don't make their 1st installment
- by virtue of the fact that they can make the 1st instalment I'm pretty sure that this would get around the "apparent authority issue"
And for pie; the reason why i asked here prior to my solicitors is that as a small business owner if i asked for proffessional counsel (legal, financial, marketing etc) everytime i needed it then there'd not be much left in the pot to pay the dividends as professionals tend to charge by the 1/10th of the hour. So usually i ask my circle of friends with expertise in the relevant areas but alas ive not got any friends who are lawyers so reach out to PH massive and guage their oppinions but appreciate that it's not legal counsel.
I think we're covered as;
- we are the supplier to the customer who on the whole are private individuals
- there is always a good email trail showing offer and acceptance
- the contract is then sent together with the details of where to make payments
- if they disagree with the terms and conditions then they don't make their 1st installment
- by virtue of the fact that they can make the 1st instalment I'm pretty sure that this would get around the "apparent authority issue"
And for pie; the reason why i asked here prior to my solicitors is that as a small business owner if i asked for proffessional counsel (legal, financial, marketing etc) everytime i needed it then there'd not be much left in the pot to pay the dividends as professionals tend to charge by the 1/10th of the hour. So usually i ask my circle of friends with expertise in the relevant areas but alas ive not got any friends who are lawyers so reach out to PH massive and guage their oppinions but appreciate that it's not legal counsel.
speedking31 said:
OP. When you get a wetsigned document, how do you know (confirm) that is the originator's signature? If they just made a random scribble do you think the contract would be less valid?
We ask for a scan of their passport!So, before we give them anything we've had an email exchange, their full payment, a copy of their passport, a contract signed and emailed in plus two copies sent through the post one of which we countersign and return to them!
On the whole it's not an issue but when it's our peak period timings get tight, this week we in the UK on Tuesday made a sale to a person in Sweden who wishes to take delivery in France on Friday!
Marcellus said:
speedking31 said:
OP. When you get a wetsigned document, how do you know (confirm) that is the originator's signature? If they just made a random scribble do you think the contract would be less valid?
We ask for a scan of their passport!So, before we give them anything we've had an email exchange, their full payment, a copy of their passport, a contract signed and emailed in plus two copies sent through the post one of which we countersign and return to them!
On the whole it's not an issue but when it's our peak period timings get tight, this week we in the UK on Tuesday made a sale to a person in Sweden who wishes to take delivery in France on Friday!
Marcellus said:
We ask for a scan of their passport!
Can they email that to you? You're potentially just comparing one forged document with another...FWIW, a contract I've been dealing with had this clause inserted.
Sanity Clause said:
The parties agree that a fax copy or a scanned PDF version of the Agreement shall be as effective as delivery of any original signed counterpart and the parties agree that faxed or scanned PDF signatures are effective and binding.
johnfm said:
A bigger issue is distance selling rights for B2C sales and also what you do when your Swedish buyer for the French delivered product stops paying and goes AWOL!
Got that one covered.......... by the time we deliver/release anything they've paid in full plus a further 20% Damage deposit!Oddly enough people would rather sleep in a bed than in a pile of snow
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