ContractPal Blog

Document magazine has a very informative article on the risks of using electronic signatures.  The article is written by Gregory T. Casamento and Patrick J. Hatfield from Lcoke Lord Bissell & Liddel LLP.

I like the article because it does a good job of addressing a common mistake that businesses or organizations make when considering or creating an electronic signature solution.   That mistake is to view the requirements for an electronic signature solution solely as technical, to be solved by the IT department.   Ignoring the other requirements, or risks as identified in the article may result in a electronic signatures that are not enforceable.

Companies like American Express and Dillards have learned the hard way that their internally built systems did not stand up in court, although technically they did have electronic signatures.

The six risks identified are Authentication, Repudiation, Compliance, Admissibility, Adoption and Relative.  Check back in the coming days as we go into how to mitigate each of these risks.

Recently, Dillards learned first hand why using an electronic contract automation Software as a Service like ContractPal is important (Kerr vs. Dillard Store Services).

On their Intranet, Dillards offers various employment related agreements including an arbitration agreement.  An employee, Yolanda Kerr didn’t want to sign the agreement. Apparently a manager, who had the rights to manage Yolanda’s password reset it and somehow during the process, the arbitration agreement got signed.

The Kansas US District Court considering the matter held that the agreement was unenforceable because Dillards couldn’t meet their burden of proof to establish that Kerr had signed the agreement. Not only did the court hold that Dillards couldn’t prove the Kerr signed the agreement but also that Dillards couldn’t prove that she may have done so by accident or mistake.

Whether the arbitration agreement was enforceable wouldn’t have been an issue had Dillards used ContractPal. Employers who use ContractPal don’t have access to change user passwords. Only employees can reset their own passwords, and when dealing with personal agreements like employment related agreements, agreements can be associated with personal profiles to improve their enforceability. In addition, an agreement on ContractPal cannot be signed by accident or mistake. Agreements are directly presented to users in a fully enforceable signing ceremony.