A Brief History
Agreements have been made official and binding in various ways over the centuries. Before literacy became prominent, agreements were made not only with handshakes, but sometimes with a slap in the face or a lock of hair cut off and given to the other party. Signet rings became popular, especially in France, whether they were pressed into beeswax to make a unique impression or presented physically with a verbal message to authenticate the communication. Around the 9th and 10th centuries, the sign of the cross was common among scribes as a form of validation, which may have morphed into the more modern practice of illiterates signing an “x” on the line. By the 16th and 17th centuries, the rise of education led to more written contracts, and England’s 1677 Statute of Frauds required all contracts to be written and signed, much like we do now.
As technology advances, questions arise regarding signatures. As early as 1869, a legal case in New Hampshire, Howley v. Whipple, established the telegram as a legitimate way to make binding agreements, even though it cannot be signed in the traditional way. Faxed signatures have also been challenged, since the document is not technically the original with a “wet signature.” Now, the internet has provoked similar questions, such as whether an email signature or a checked box next to “Terms and Conditions” constitutes legal agreement. Overwhelmingly, the verdict is yes. In fact, the United States passed the ESIGN Act, or Electronic Signatures in Global and National Commerce Act, in the year 2000 confirming the validity of electronic signatures in foreign and interstate commerce. State governments have followed suit, accepting digital signatures as legally binding.
Ink vs. Internet
It may seem counterintuitive for an electronic signature to hold such authority, but there are several reasons why it makes sense. A signature implies at least two things: first, that the parties signing the document are who they say they are, and second, that they intend to be bound by the terms of the agreement. If the document was ever challenged legally, the court would need to determine that the party in question had the authority to sign and the intention of agreeing to its terms. Neither of these requirements stipulates a penned signature on physical paper.
The fact of the matter is that handwritten signatures are quickly becoming obsolete. In today’s fast-paced business world, there just isn’t time to print out a document, sign it yourself, and finally send it to or meet with another party so they can add their signature. Still, signatures are a vital part of business in many industries. In a White Paper commissioned by AIIM, it was found that 72% of the organizations surveyed require formal signatures in at least one-fifth of their documents and business processes, 40% of those saying that number is more than half. To make matters worse, 68% of the survey participants reported that the signature process usually halts progress for at least a day, up to a week or more for 23% of them.
In addition to wasting valuable time, all these signatures cost money. AIIM estimates that on average, 59% of all process documents would not need to be printed at all if a handwritten signature was not required. With an electronic signature system in place, these organizations could potentially save money on paper, ink or toner, printers, fax machines, and even the personnel who perform these menial tasks. Modern business demands faster, if not practically instantaneous, transactions, as well as a decrease in the cost of doing business. Electronic signatures fill both needs, especially when technology such as tablets, smart phones, and computers are so prevalent.
Numbers Don’t Lie
In a study by Forrester Research, it is reported that the use of electronic signatures has increased by 53% annually since 2012. In 2014, there were 210 million transactions completed with e-signatures, a number that is forecasted to rise to over 700 million by 2017. To illustrate the benefits, Forrester also interviewed a loan company that had made the switch to digital signatures. Their process time for closing a loan was reduced from 40 days to only 8.1, and in three years, not a single signature had been legally challenged. This could be similarly beneficial for companies in the insurance industry as they would be able to boost application numbers as well as speed the process of approving policies and claims.
There are companies that offer only e-signature services, but they require uploading your file, marking where signatures are required, and are altogether too much effort. A better idea is to invest in document management software, or DMS, that has fully-integrated electronic signature capability, such as eFileCabinet. When you implement an innovative DMS system like eFileCabinet, all of your documents will end up in a central data repository, accessible from a computer, tablet, or mobile device. If a signature is required, the e-signature function allows you to send a document that needs to be signed, sign a document yourself, save documents that have been signed, and track which signatures have been obtained and which are still needed, all from one intuitive application. As electronic signatures continue to become the norm, eFileCabinet will ensure that