Electronic Signatures – Too Fast, Too Easy?

What is DocuSign?

DocuSign is a program which allows for electronic signatures to be placed on documents, such as Agreements of Purchase and Sale and Listing Agreements, from anywhere and from any device.

How it works

If DocuSign is utilized by a registrant in a sale situation, for example, signatures of the purchaser are obtained by forwarding the document, usually by email, to the purchaser. The Agreement of Purchase and Sale will then appear on the purchaser’s device. Initials and signatures are obtained by simply scrolling through the document and tapping on the spots where they are required.

On an Agreement of Purchase and Sale, initials and signatures can usually be affixed through DocuSign within about 10 seconds. Once tapped, the document automatically scrolls down to the next spot where an initial or signature is required. The same holds true for any document being signed through DocuSign.

The Risk

When signing is so fast and easy, and detailed documents are being reviewed on screens never intended to display complex legal documents, important details can be overlooked.

Furthermore, because the registrant may not be present when the client or customer’s signatures are being affixed to the Agreement, a clause‐by‐clause review of the Agreement may not be taking place. It is doubtful that a registrant will provide a detailed letter of explanation along with the request to sign the Agreement, resulting in only the essential terms of the Agreement, such as price, deposit, and closing date, being discussed ahead of signing.

Claim Example

In one of our recent cases involving DocuSign, the purchase price on the Agreement was indicated to be $100,000 less than expected. The seller executed the Agreement through DocuSign and missed the fact that the purchase price was misstated. While this may not occur frequently, since one would expect buyers and sellers to actually look at the purchase price, there are many other terms of the Agreement which require careful review and explanation before signing.