DIGITAL DOCUMENTS, DIGITAL SIGNATURES AND THEIR USE IN BUSINESS

WHAT WE CAN AND SHOULD DO TO TAKE ADVANTAGE OF THESE TOOLS

By Patrick H. Stiehm*

Seven years ago, I made a business presentation concerning the legal aspects of utilizing electronic documents and electronic signatures to create and document legally enforceable contracts. Although in a majority of jurisdictions the statutory predicates necessary to create and enforce such documents were in place at both the national level (See 15 USC Chapter 96 – Electronic Signature In Global and National Commerce Act), and at the state level, (See The Uniform Electronic Transactions Act, hich has been enacted in 47 States, the District of Columbia, Puerto Rico and the U.S. Virgin Islands), my audience displayed considerable skepticism.

Indeed, I felt like a lawyer in ancient times attempting to convince his Assyrian clients that contracts on clay tablets were as valid as those chiseled in stone. Or a little later, perhaps an Egyptian lawyer tried to convince clients that contracts on papyrus were as good as those on clay tablets. After that, I imagine a medieval lawyer tried to convince clients that paper contracts were just as enforceable as ones on animal hides.

Humans are reluctant to change from the tried and true for the purpose of adopting an innovative way of doing things. We don’t want to be taken out of our comfort zone. Our hesitancy is even greater where money, goods, services and the profits and success of our businesses are involved. Lawyers in their capacity as legal advisors to business are equally slow to adapt to changes. This can affect a businessperson’s attitude towards the new technology. In addition, despite the ready availability of statutory recourse to enforce electronic documents, it can be a chore convincing a court or other business entity to accept an electronic transaction. Sometimes, a court order may even be necessary to ratify conduct pursuant to an electronic agreement executed with electronic signatures.

Seven years ago, the prevalent attitude was that somehow electronic documents and electronic signatures were not as legally valuable as paper documents with wet (hand written) signatures. As the ads for Siemens claimed, “…That was then, this is now.” You would think that commerce would have developed by now a widespread acceptance of electronic documents and signatures.  Not quite, but we are advancing slowly in that direction.

We are making progress towards an era when all documents including contracts will primarily be electronic. Paperless offices and electronic record keeping is encouraged at multiple governmental levels and for a variety of reasons. (See Sparks, David, Paperless: A MacSparky Field Guide, Self Published 2012, and Walker, Richard Achieving the Paperless Office, Efficient Technology, Inc., 2009, which are just two examples of this encouragement.)

A concrete example of this evolution may be found in our federal court system. Federal courts have largely converted to electronic records. In fact, there are federal jurisdictions where you cannot file documents in hard copy without jumping through hoops designed to discourage the use of paper.

This is not just an American development; it is happening worldwide. A number of countries besides the United States encourage electronic records, including but not limited to: Canada (See the Uniform Law Conference of Canada’s adoption of the Uniform Electronic Commerce Act), the United Kingdom (Electronic Signature Act,) and Israel (Electronic Signature Act). The United Nations has joined in encouraging this development. [See the United Nations Commission on International Trade Law (UNCITRAL), which adopted the UNCITRAL Model Law on Electronic Commerce].  (To more fully appreciate the worldwide scope of developments, see Digital Signatures and Law, listing countries that have legislated regarding electronic signatures.)

When dealing with electronic documents and electronic signatures, business people always come back to the same basic question: “Is that legal?”

What they really mean is:

If the writing in question would be “legal” as a paper document with a “wet” signature, would the fact that it is an electronic document and is “signed” with an electronic signature be a defense to its enforcement?

Put more simply, if it’s good on paper with a wet signature, it is good as an electronic document with an electronic signature?

The answer is usually going to be “Yes!”

Yet many business people, lawyers and courts remain uncomfortable with electronic transactions. The best solution to this resistance, I believe, is for those of us who are more technologically oriented to utilize electronic documents routinely and as a matter of habit. Lawyers do this by encouraging their clients to use electronic documents and signatures in all appropriate transactions in which they are involved. Business people do this by developing the habit of using electronic documents and signatures unless there is a good reason not to. Frequently, it makes sense and expedites the transaction. If we persist even in matters where we may initially be the only ones, I submit that others will see the benefit, gain experience, and become comfortable with the process. This evolution towards greater acceptance deserves our full support.

*Patrick H. Stiehm is a member of the Virginia, Maryland and Minnesota state bars. He is in solo practice under the name Stiehm Law Office. His major areas of concentration are commercial finance, and representing the left-behind parent in international child kidnapping cases in both state and federal court in Virginia and throughout the United States.

The material contained in this blog post is opinion and is offered for informational purposes only. It is not a substitute for a private, independent consultation with an attorney. You are strongly advised to do your own due diligence when it comes to making decisions relating to the matters discussed. Those decisions should be made in conjunction with — and after being fully informed by — competent counsel of your choosing.