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People have been signing contracts for as long as written language has existed. Relatively speaking, digital signing has only been around for a tiny fraction of that time; just a few decades, in fact. Yet in this relatively short period, legal agreements have undergone many critical changes as digital transformation redefines technologies and courts decide what constitutes an acceptable replacement for pen and paper.
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Digital signatures were first made legal in the United States via the Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000. The law allowed companies to collect signatures electronically in the face of a growing volume of online transactions. It was meant to provide clarity for businesses that weren’t sure if digital signatures would stand up in court.
Unfortunately, that hasn’t quite been the case. Defining the legal enforceability of different signing methods has been a struggle as technology continues to change. In today’s digital world, the idea of providing a signature every time you use a website or sign into a social media platform is ridiculous.
Innovative solutions have proven that legally recognized digital signatures can come in many different forms – even the click of a button. But the definition of a digital signature is yet to be written in stone as new signing methods are tested in court.
Just about every type of software needs some sort of user agreement to protect its developer from litigation. How these terms are presented has shifted alongside key turning points in the industry, from the first floppy disks to modern web applications.
This notice informed customers that breaking the shrinkwrap and using the included software would be considered acceptance of the terms. Of course, this delivery method no longer worked once software sales moved online and discs were phased out entirely.
With no way to physically attach software agreements, developers moved their terms and conditions to equivalent virtual locations. The result was browsewrap, a type of agreement that notifies consumers of their consent to the listed terms simply by using a website or software. While it seems like a logical progression, this type of agreement only holds up legally in fewer than one out of every eight court cases.
Since browsewrap agreements are typically placed in page footers where they won’t interfere with user experience, most people don’t even see them. Many courts have used this line of thinking to determine that consent can’t be given to terms that aren’t clearly presented.
A halfway point between browsewrap and clickwrap, sign-in-wrap agreements notify a user that signing in to use a platform indicates acceptance of the associated terms. While this method tends to be more successful than browsewrap, it has a major vulnerability.
Sign-in-wrap agreements’ validity often depends on specific design elements like page layout and colors. This means that their success hinges entirely on the decisions made by a design team that doesn’t understand such complex legal issues.
The most modern signing method, clickwrap, is the best solution to date in terms of blending user experience with legal compliance. Users can give informed consent by clicking a checkbox or button indicating that they agree to the terms, and companies are able to guarantee compliance by requiring this action to be completed before the platform can be used. There is still some reliance on intuitive design, but to a much lesser extent than with other agreement types.
When digital signatures first came into widespread use in the early 2000s, signing contracts as a PDF attachment seemed like a major innovation. And it was – compared to the days- or weeks-long process of physically sending documents by mail to be signed in ink, that is. Decades later, the traditional eSignature process of sending PDFs back and forth to be signed now feels incredibly cumbersome compared to newer technologies.
Shockingly, many companies still do business this way. PDF signing not only adds time and expense to the sales cycle, it’s also an easy way to lose customers who have grown to expect a more intuitive process. Many of these contracts can easily be adopted with embedded signing, a digital method that still allows for typed or drawn digital signatures, but in a format that is responsive across multiple devices and takes seconds to complete.
Fast digital signing methods like clickwrap are the most convenient for both businesses and customers, but they aren’t always the best solution. There are three acceptance formats that meet today’s digital standards and compliance requirements: clickwrap, embedded signing, and eSignatures. Companies should choose their signing method based on the volume of contracts to be issued and the dollar value of each.
With the ongoing evolution of legal agreements, there are more possibilities for presenting legal agreements in your app. This allows for more seamless workflows and greater innovation for your company's digital asset. To learn more, check out our eBook, Digital Transformation of In-App Legal Agreements.