Three Things To Note About E-Signatures And E-Contracts
Affixing your signature to a document means that you understand, approve and accept the information it contains. Signatures are commonly used to sign contracts/agreements and make them legally binding. For a long time, people have been signing things by using pens to make distinct marks, but this is changing. There are now electronic signatures that do not involve the use of conventional ink and paper. Here are three things you should know about e-signatures:
As Valid As Paper Signatures
E-signatures are not inferior to paper signatures. There are federal laws governing e-signatures, most of them are contained in the Electronic Signatures in Global and National Commerce Act ("ESIGN"). In fact, the law specifically declares that a contract cannot be rendered invalid simply because it is signed by an electronic signature. Also, the majority of states have their own laws governing e-signatures. In short, an agreement that is electronically signed carries has the same weight as the same document signed in ink-and-paper format.
Does Not Apply In All Cases
Even though electronic signatures have the same weight and legal connotation, they are not acceptable in all documents. There are still documents that are only valid if they are signed in the conventional form – ink on paper. Examples include divorce decrees, wills, foreclosures, prenuptial agreements and others.
Also, there are certain instances in which it makes more sense to opt for traditional signatures over e-signatures, even if the latter is allowed. An e-signature works best if the signatory can be called upon to verify its authenticity if there is a need. For example, it's wise to avoid e-signatures in documents (such as a health insurance policy) that may require authentication after the demise of one of the signatories.
Need for Records
There are some types of contracts that need to be kept for future references. For example, a lease agreement should be kept by both parties so that they can reference it in case of future disputes. If this is needed for a paper contract, then it should also be done for an electronic contract.
This means that the electronic document should be kept in a format that does not differ from the original document, and it should also be accessible to all relevant parties. Failure to do that, for example, if only one party can access the document, may render it null and void.
Note that the issues and laws surrounding electronic signatures and contracts are constantly evolving. Therefore, it's always wise to confirm with a lawyer from a firm like Michael B. McCord before executing an e-contract. This is even more necessary if the contract is serious or if its breach has serious ramifications.