Using Electronic Signatures in Contracts

Buyers' Training
September 17, 2012 — 1,237 views  
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The ability to electronically sign a document has become increasingly
popular in recent years, allowing businesses to interact with customers and
partners in a much more efficient manner. A digital or electronic signature
takes the place of a standard signature on paper. In most instances, it is a
digital rendering of the physical signature, meaning it looks nearly identical
on the digital document. There are an assortment of different programs that
make it possible to sign documents virtually, eliminating the need to send a
signed document back through the mail system or via fax. 

One of the main concerns with electronic signatures is their enforceability
legally. A physical signature has always been used in court to show that two
parties have agreed to the specific terms laid out within a particular legal
contract, but electronic signatures are a relatively new game. Because using
electronic signatures makes it much easier to conduct business with parties who
may not be located in the same location, many governing bodies and
organizations have begun to accept an electronic signature in lieu of a more
traditional signature on paper. 

The United Nations was among the first to make waves in this area, publishing
its model laws on electronic commerce in 1996. Using those model laws as a
guideline, many countries began to enact legislation that allows an electronic
signature to fill the same role of a traditional signature. What can legally be
defined as an electronic signature varies greatly in countries like the United
States, where 47 states have legally enacted the Uniform Electronic
Transmissions Act (UETA). 

The courts have continually found electronic signatures to serve the same
purpose as a traditional signature, meaning those who have signed contracts digitally
must meet the terms of that contract as defined by the law. Challengers to
these cases have stated that the issue with an electronic signature is that the
authenticity of the individual's identity cannot be ascertained when a document
is signed remotely. To combat this issue, many businesses and attorneys who
accept electronic signatures require some proof of identity along with the
signature, such as a state-issued I.D. card. 

As businesses become ever more reliant on virtual transactions, electronic
signatures will likely become more common. The laws currently in place uphold
the validity of these signatures and their enforceability. This means that
companies can rest assured knowing that they are protected, by both digital and
physical signatures. 

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