A Framework for Designing an Effective e-Signature Process: Part III -- Proving an Electronic Signature

This is the final installment of a three-part series describing a framework for implementing an effective e-signature process. This installment addresses proving an electronic signature. PROVING AN ELECTRONIC SIGNATURE

Electronically signed documents are computer records, and courts have long since accepted computer records as reliable evidence if certain admissibility standards are proven. With a well-designed process and the right technology, the proponent of the electronically signed document might have a better chance of proving the veracity of that document than a paper document signed in wet ink.

Admissibility -- The initial hurdles.

Typically, under the Federal Rules of Evidence, and most similar state laws, objections to the admissibility of computer records are based on challenges to the authenticity of the computer records and challenges to the computer records under the hearsay rule. Both of these challenges have been successfully overcome many times.

Authentication of the computer record establishes that the record is what the proponent claims it to be. Federal Rule of Evidence 901 dealing with authentication specifically provides that authentication may be provided by "evidence describing a process or system used to produce a result and showing that the process or system produces an accurate result." This type of evidence is often provided by the testimony of a witness with personal knowledge of the system's operation, the accuracy of the data input to the system, and the output generated by the system.

To the extent the computer record that is sought contains a record of human statements -- for example, answers to an insurance application -- then the proponent of the computer record must be prepared to address a hearsay challenge. Courts have generally admitted computer records under the "business records" exception to the hearsay rule. Although this is a complex area beyond the scope of this article, in general, computer records will be admitted under the business records exception to the hearsay rule if a witness for the proponent of the records establishes that the records were created as part of a routine, day-to-day practice in the course of a regularly conducted business activity.

Objections to computer records are sometimes analyzed under the "best evidence" rule, or the rule that requires that the original of a writing be produced if the contents of the writing are sought to be proved. The federal rules, and most state rules, now consider computer records to be original writings so long as the records sought to be introduced reflect the data accurately. With respect to computer records, the "best evidence" analysis is often combined with the business records exception for hearsay analysis.

Trustworthiness -- The challenge and the opportunity.

Once the computer records are admitted as evidence, the finder of fact must still be persuaded to trust the records. It is in this context that an electronic signature might actually be less challenging to prove than a wet signature on a paper document.

Consider the situation in which a person denies that he or she signed the document. Most e-signature applications incorporate identity verification measures that are not available, or practical, in a traditional setting. Another challenging situation is when a party attempts to alter a document after it has been signed in an attempt to fraudulently amend his or her agreement. Utilizing encryption and related technologies, an electronically-signed document may be effectively locked so that subsequent alterations are virtually impossible.

Addressing the identity verification and repudiation risks through an e-process is only half of the story. Most systems have the capability to collect and record real-time transaction-related data. For example, common Web site tracking technology records each time a user accesses a particular page on the site, what that user does on the site, and when he or she leaves the site. Taken to a more sophisticated level, systems might be designed to capture "audit trail" data specific to the critical elements of a particular transaction. The audit trail data could include the date and time a person signed a particular document and the contents of that document at the precise moment it was electronically signed. While audit trail technology is a powerful component of an e-process, there are no practicable means to capture and record this type of transaction-specific data for paper documents signed in wet ink.

Using an e-process will not eliminate the multitude of issues litigated related to signatures or terms of signed documents. When examined critically, however, an effective e-signature process incorporates technology and processes that should improve a company's ability to defend and enforce electronically signed documents.

The authors practice in the Atlanta office of the law firm Lord, Bissell and Brook, LLP and can be reached at [email protected] and [email protected], respectively. Mr. Anthony concentrates a significant portion of his practice on electronic commerce, while Mr. Bruyere is partner in the firm's litigation group.

June 17, 2004 - Mock Trial on Electronic Signatures
Register - www.lordbissell.com/mocktrial