October 19, 2011
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Question
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Ken,
Thank you for your daily updates.
I have a question about the use of DocuSign and using a paperless contract system. Assuming we are using the “correct†contracts with DocuSign. What I want to know is if you have an opinion on using paperless contracts and having the customer sign them via an iPad or tablet onsite. DocuSign then emails the customers copy to them and we are able to keep them on file or print them off. Specifically, is emailing the customer these documents satisfactory for the 3-day right of rescission? Any insight you can offer on this topic would be helpful.
DocuSign, the paperless company, is adamant that any contract "signed" through their
software will hold. http://www.docusign.com/support/faqs
Thanks,
Randy Chipman
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Answer
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There is a Federal statute, Electronic Signatures in Global and National Commerce Act, which authorizes electronic signatures. States also have electronic signature statutes, and it's easy to understand how electronic signatures should be and are accepted in place of traditional paper contracts with original signatures.
What I had more trouble with was how electronic signatures complied with the myriad consumer statutes and regulations for residential sales, such as the 3 day cancellation notice, font size and color, required language, warning provisions, requirement that a fully executed copy of the contract be left with the consumer and more.
Electronic contracts on line, filled out by the the consumer clicking through the contract and then with a final click accepting the contract, is also fairly understandable. But what about getting an electronic contract signed at the house. It can be in connection with a sale or signing a consumer up for monitoring or service.
The answer is below. How many alarm companies are prepared to embrace this technology at this point is another issue. The consumer can consent to electronic compliance, and apparently that consent can itself be electronic. Here's info on the statute - and now you know as much about it as I do.
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From an FTC and Dep. Of Commerce report on Electronic Signatures and
Consumer Consent Provision
Section 101(c)(1)(C)(ii) of the Federal Electronic Signatures in Global and
National Commerce Action provides that information required by law to be in
writing can be made available electronically to a consumer only if he or she
affirmatively consents to receive the information electronically AND the
business clearly and conspicuously discloses specified information to the
consumer before obtaining his or her consent. Section 101(c)(1)(A) and (B).
The disclosures include: (1) whether the consumer may request to receive the
information in non-electronic or paper form; (2) the consumer's right to
withdraw consent to electronic records and the consequences- including
possible termination of the relationship- that will result from such
withdrawal; (3) the transaction(s) or categories of records to which the
consent applies; (4) the procedures for withdrawing consent and updating the
information needed to contact the consumer electronically; and (5) how the
consumer may request a paper copy of the electronic record as well as what
fees, if any, will be charged for the copy. Section 101(c)(1)(B)(i)-(iv).
In addition, business must provide the consumer with a statement of the
hardware and software needed to access and retain the electronic record.
Section 101(c)(1)(C)(i).
Moreover, Section 101(c)(1)(C)(ii) states that a consumer's consent
to receive electronic records is valid only if the consumer "Consents
electronically or confirms his or her consent electronically, in a manner
that reasonably demonstrates that the consumer can access information in the
electronic form that will be used to provide the information that is the
subject of the consent." Section 101(c)(1)(C)(ii) overlays existing state
and federal laws requiring that certain information be provided to consumers
in writing. It also provides the framework for how business can comply with
the underlying statutory or regulatory requirement to provide written
information to consumers electronically- whether the information is a
disclosure, a notice, or a statement of rights and obligations- within the
context of a business-to-consumer transaction.
Link to E-Sign act:
http://www.fca.gov/download/public%20law%20106-229%20e-sign.pdf
101: (c) CONSUMER DISCLOSURES.-
(1) CONSENT TO ELECTRONIC RECORDS.-Notwithstanding
subsection (a), if a statute, regulation, or other rule of law
requires that information relating to a transaction or transactions
in or affecting interstate or foreign commerce be provided
or made available to a consumer in writing, the use
of an electronic record to provide or make available (whichever
is required) such information satisfies the requirement that
such information be in writing if-
(A) the consumer has affirmatively consented to such
use and has not withdrawn such consent;
(B) the consumer, prior to consenting, is provided with
a clear and conspicuous statement-
(i) informing the consumer of (I) any right or option
of the consumer to have the record provided or made
available on paper or in nonelectronic form, and (II)
the right of the consumer to withdraw the consent
to have the record provided or made available in an
electronic form and of any conditions, consequences
(which may include termination of the parties' relationship),
or fees in the event of such withdrawal;
(ii) informing the consumer of whether the consent
applies (I) only to the particular transaction which
gave rise to the obligation to provide the record, or
(II) to identified categories of records that may be
provided or made available during the course of the
parties' relationship;
(iii) describing the procedures the consumer must
use to withdraw consent as provided in clause (i) and
to update information needed to contact the consumer
electronically; and
(iv) informing the consumer (I) how, after the consent,
the consumer may, upon request, obtain a paper
copy of an electronic record, and (II) whether any fee
will be charged for such copy;
(C) the consumer-
(i) prior to consenting, is provided with a statement
of the hardware and software requirements for access
to and retention of the electronic records; and
(ii) consents electronically, or confirms his or her
consent electronically, in a manner that reasonably
demonstrates that the consumer can access information
in the electronic form that will be used to provide
the information that is the subject of the consent;
and
(D) after the consent of a consumer in accordance
with subparagraph (A), if a change in the hardware or
software requirements needed to access or retain electronic
records creates a material risk that the consumer will
not be able to access or retain a subsequent electronic
record that was the subject of the consent, the person
providing the electronic record-
(i) provides the consumer with a statement of (I)
the revised hardware and software requirements for
access to and retention of the electronic records, and
(II) the right to withdraw consent without the imposition
of any fees for such withdrawal and without the
imposition of any condition or consequence that was
not disclosed under subparagraph (B)(i); and
(ii) again complies with subparagraph (C).
(2) OTHER RIGHTS.-
(A) PRESERVATION OF CONSUMER PROTECTIONS.-
Nothing in this title affects the content or timing of any
disclosure or other record required to be provided or made
available to any consumer under any statute, regulation,
or other rule of law.
(B) VERIFICATION OR ACKNOWLEDGMENT.-If a law that
was enacted prior to this Act expressly requires a record
to be provided or made available by a specified method
that requires verification or acknowledgment of receipt,
the record may be provided or made available electronically
only if the method used provides verification or acknowledgment
of receipt (whichever is required).
(3) EFFECT OF FAILURE TO OBTAIN ELECTRONIC CONSENT
OR CONFIRMATION OF CONSENT.-The legal effectiveness,
validity, or enforceability of any contract executed by a consumer
shall not be denied solely because of the failure to
obtain electronic consent or confirmation of consent by that
consumer in accordance with paragraph (1)(C)(ii).
(4) PROSPECTIVE EFFECT.-Withdrawal of consent by a consumer
shall not affect the legal effectiveness, validity, or
enforceability of electronic records provided or made available
to that consumer in accordance with paragraph (1) prior to
implementation of the consumer's withdrawal of consent. A
consumer's withdrawal of consent shall be effective within a
reasonable period of time after receipt of the withdrawal by
the provider of the record. Failure to comply with paragraph
(1)(D) may, at the election of the consumer, be treated as
a withdrawal of consent for purposes of this paragraph.
(5) PRIOR CONSENT.-This subsection does not apply to
any records that are provided or made available to a consumer
who has consented prior to the effective date of this title to
receive such records in electronic form as permitted by any
statute, regulation, or other rule of law.
(6) ORAL COMMUNICATIONS.-An oral communication or a
recording of an oral communication shall not qualify as an
electronic record for purposes of this subsection except as otherwise
provided under applicable law.