Contract Law 101: Are Scanned Signatures Valid - PowerPoint PPT Presentation

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Contract Law 101: Are Scanned Signatures Valid

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Trouble is, you keep your end of the bargain, but the client pays you only 50% of the agreed price. This is where you find out if a scanned signature will hold water in a court. – PowerPoint PPT presentation

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Title: Contract Law 101: Are Scanned Signatures Valid


1
Contract Law 101 Are Scanned Signatures Valid
2
Before we start getting into the nubbins of this
article, I want you to bear something in mind. If
you have spent ages working hard, building your
reputation, and youre currently working with
clients and building a successful business, would
you put it at risk because you couldnt find the
time to do one little thing correctly that is
to make sure your online econtracts and documents
have valid signatures from all parties. With
this in mind, lets look at the contract law
around a scanned signature. So, youve got a
great client and now youre finalizing a contract
to make sure everything between you is agreed and
acknowledged. The contract contains details and
promises such as what you will deliver and when,
it also states what price the client will pay on
delivery. Then you both come to sign the
contract. Trouble is you live in different
continents. Postage, even expedited, will take at
least 2 days and it could get lost. So you both
decide to use an econtract. You sign on the
dotted line, scan the contract, and email it
across for final sign off from your client. At
least now youve signed your econtract,
admittedly with scanned signatures, but you can
start work and meet that tight deadline. Trouble
is, you keep your end of the bargain, but the
client pays you only 50 of the agreed price.
This is where you find out if a scanned signature
will hold water in a court.
3
Trouble is, you keep your end of the bargain, but
the client pays you only 50 of the agreed price.
This is where you find out if a scanned signature
will hold water in a court. What can go wrong
with scanned signatures on an econtract? The
thing about signatures is that they are simply an
attestation that a person agrees to something. It
is the something or in other words the promises
within a contract, that normally cause issue
like non-payment, or a disagreement in the
expectations of the contract. If you simply
placed a scanned signature on the document, that
document could be sneakily changed, and it would
be difficult to prove it didnt originally
contain those inserted clauses or changed terms.
It is all too easy to electronically manipulate
an econtract. This actually happened to a
colleague who was a CTO of a software development
company. The CTO signed a contract that had
various clauses, none of which mentioned
intellectual property of existing products. The
worst thing happened and a dispute over various
ownership rights arose. The original contract had
scanned signatures on it at the insistence of the
originating company.
4
When his day in court came round, the other
company had inserted additional pages into the
contract without his agreement. However, he had
to prove that they had inserted them, and they
had not been part of the original for all
intents and purposes they looked like they were.
The dispute was long and costly, involving
forensic analysis of the contract it ended well
for my colleague but came at a cost. If the
above scenario had involved e signatures, like
those offered by ApproveMe, then it would never
have a happened. E signatures have a built-in
feature that ties the document content to the
digital signature. If anyone changes any part of
the contract, all signatures will show as invalid
and, at least in the case of the ApproveMe
platform, an audit trail is generated pointing
the finger at the person making that change. But
are scanned signatures themselves actually
valid? Having a scanned signature(s) on a
document is valid. This has to be the case in a
world where we are more likely to work with
someone geographically far, than local. It is
just convenient to be able to use an electronic
version of a document instead of hard copies in
the post.
5
Interestingly, it is an ancient act, the Statute
of Frauds which was originally enacted in 17th
century England, and that is still operational in
48 states that allows you to use scanned
signatures. The Statute of Frauds covers a number
of contract types including the sale of goods
over 500. Even though it was developed nearly
400 years ago, the elements of the law can still
be used to determine the validity of a modern day
signature. Massachusetts, in a variant of the
law, even allows emails to be used to act as a
signature on a contract. An example being the
case of Feldberg vs. Coxall. In this case, the
purchase was a piece of real estate, the
agreement falling through, but the buyers being
able to uphold the agreement by using
the Massachusetts Uniform Electronic Transactions
Act which allowed an email exchange to act like a
signature in a contract. To reiterate, having a
scanned signature on a contract is perfectly
acceptable under law. But acceptance isnt the
issue.
6
The hard part is avoiding fraud. E signatures,
that are compliant with electronic signature
laws, like ESIGN, have in-built anti-fraud
technologies to ensure that the electronic
version of signatures cannot be taken advantage
of. There is little point in knowing that your
scanned signature is accepted, if the contract it
is part of has fundamentally changed, and you
cant prove that is has. In our opening example,
the vendor would have to prove that the client
had changed the price to 50 of the original.
This is a costly thing to do. Digital signatures,
that are secure, have anti-fraud technology
components, and that creates full auditable
trails, are the only true way to created trusted
contracts. Article Resource https//www.approvem
e.com/e-signature/contract-law-101-scanned-signatu
res-valid/
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