These days, you no longer need to put pen to paper to sign a contract. Both federal and Ohio law allow many types of agreements to be electronically signed on a computer or smart phone screen by either typing your “signature” or doing something as simple as checking a box. This system of electronic signatures can have big benefits to your business. It is easier and faster to email a document or send someone to a website to check a box or type their name than it is to print out a document for them to sign and return. It also saves you the file space of saving paper documents or the time spent scanning that signed paper into your computer.
But you have to be careful with electronic signatures because the purpose of a signature is to prove that YOU are the one who read and agreed to the document. A written signature is like a snowflake, everyone’s is unique, and if you have signed with a pen, it is easy to verify that it was actually you and no one else who signed the document. However, I can type your name and make it look exactly like you do when you type your name. Without proper safeguards, electronic signatures may not prove that you have read and agreed to the terms.
For example, in a recent lawsuit, a company tried to enforce an agreement with one of its employees that the employee appeared to have electronically signed. While his electronic signature was on the document, the court held it was unenforceable. The employee denied electronically signing the document and claimed that it must have been someone else who typed his name. The court held that because there was no way to authenticate that the employee was the one who typed his electronic signature, the agreement could not be enforced.
If you want your company to rely on electronic signatures, you need to take some steps to authenticate each signature so you do not suffer a similar fate. The simplest option is to require each signer to have a unique username and password he or she must enter before signing. If the user had to enter a unique password to sign the document, then it is harder for him or her to claim down the road that someone else forged his or her signature.
Or, you can go even further and require signers to have a personal token on their phone or computer that gives them a passcode unique to them every 60 seconds. There are an increasing number of businesses that offer these security measures very inexpensively, and any cost incurred by your business may be worth it so that a big contract you’re hoping to enforce is not invalidated because you can’t authenticate the electronic signature. Talk to your attorney today to figure out if e-signatures are for you and how to best authenticate them.